<PAGE> 1
SCHEDULE 14A
(RULE 14A)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY RULE
14A-6(E)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
ASHLAND COAL, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ASHLAND COAL, INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
[ X ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------
(5) Total fee paid:
------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------
(3) Filing Party:
--------------------------------------------------
(4) Date Filed:
----------------------------------------------------
<PAGE> 2
ASHLAND COAL, INC. P.O. Box 6300 Huntington, WV 25771-6300
(304) 526-3333
March 28, 1995
Dear Stockholder:
The Board of Directors of Ashland Coal and I cordially invite you to attend
the Annual Meeting of Stockholders to be held in Huntington, West Virginia, on
Friday, April 28, 1995, at 10:30 a.m.
The formal business to be conducted is the election of Directors, approval
of a 1995 Stock Incentive Plan, and ratification of Ernst & Young LLP as
independent auditors of the company. After completion of the formal business, I
will review Ashland Coal's 1994 results of operations and the outlook for the
future. Officers and directors will be available to answer any questions you may
have about the company.
We hope you can attend the meeting in person. If you plan to attend in
person, please mark the attendance block shown on the proxy card.
WHETHER OR NOT YOU PLAN TO ATTEND, I URGE YOU TO SIGN, DATE AND RETURN THE
ENCLOSED PROXY CARD AS SOON AS POSSIBLE IN THE POSTAGE-PAID ENVELOPE WHICH IS
PROVIDED SO THAT YOUR SHARES CAN BE REPRESENTED AT THE MEETING. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE BOARD NOMINEES, FOR APPROVAL
OF THE 1995 STOCK INCENTIVE PLAN, AND FOR RATIFICATION OF THE APPOINTMENT OF
ERNST & YOUNG LLP AS INDEPENDENT AUDITORS FOR 1995.
I hope you will review the enclosed Annual Report. I look forward to seeing
you in Huntington.
Sincerely,
WILLIAM C. PAYNE
Chairman of the Board,
President and Chief
Executive Officer
<PAGE> 3
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS OF
ASHLAND COAL, INC.
TO BE HELD APRIL 28, 1995
To the Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Ashland
Coal, Inc., a Delaware corporation (Ashland Coal), will be held on Friday, April
28, 1995, at 10:30 A.M., local time, at the Ashland Coal Headquarters Building,
2205 Fifth Street Road, Huntington, West Virginia, and at any adjournment
thereof, to take action upon the following proposals as well as such other
business as may properly come before the Annual Meeting or any adjournment
thereof: (1) to elect ten directors to the Board of Directors, three of whom
shall be elected by holders of outstanding shares of Preferred Stock and seven
of whom shall be elected by holders of outstanding shares of Common Stock; (2)
to approve the 1995 Stock Incentive Plan (copy attached as Exhibit A); and (3)
to ratify the appointment of Ernst & Young LLP as independent auditors for 1995.
The Board of Directors has fixed the close of business on March 17, 1995,
as the record date for the determination of stockholders entitled to notice of
and to vote at the Annual Meeting or any adjournment thereof.
In order that your stock may be represented at the Annual Meeting, please
date and sign the enclosed proxy card and return it in the accompanying
envelope. If you attend the Annual Meeting and give written notice to Ashland
Coal's Secretary prior to the voting of your proxy, you may vote in person even
though you have previously sent in your proxy card.
By Order of the Board of Directors,
ROY F. LAYMAN
Administrative Vice President
and Secretary
Huntington, West Virginia
March 28, 1995
<PAGE> 4
ASHLAND COAL, INC.
2205 FIFTH STREET ROAD
HUNTINGTON, WEST VIRGINIA 25701
(304) 526-3333
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
APRIL 28, 1995
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Ashland Coal, Inc. (Ashland Coal) of proxies to be
voted at the Annual Meeting of Stockholders to be held on Friday, April 28,
1995, at 10:30 A.M., local time, at the Ashland Coal Headquarters Building, 2205
Fifth Street Road, Huntington, West Virginia, and at any adjournment thereof,
for the purposes set forth in the accompanying Notice. This Proxy Statement and
the accompanying form of proxy will be mailed to stockholders commencing on or
about March 28, 1995. Ashland Coal's mailing address is P. O. Box 6300,
Huntington, West Virginia 25771. An annual report including financial statements
for the year ended December 31, 1994, is enclosed with this Proxy Statement.
Only the holders of record of Ashland Coal's Common Stock, par value $.01
(Common Stock), convertible Class B Preferred Stock, and convertible Class C
Preferred Stock at the close of business on March 17, 1995, will be entitled to
vote at the Annual Meeting. At that date there were 13,727,484 shares of Common
Stock, 150 shares of Class B Preferred Stock and 100 shares of Class C Preferred
Stock issued and outstanding.
With respect to the election of directors, the holders of the outstanding
shares of Class B and Class C Preferred Stock, voting together as a class, have
the right to elect one director for every 63 shares of Class B or Class C
Preferred Stock held by them. The maximum number of directors to be elected by
the holders of Class B and Class C Preferred Stock is three. Holders of Class B
and Class C Preferred Stock are entitled to one vote for each share of Preferred
Stock in the election of directors. The remaining seven directors are elected by
the vote of the holders of the outstanding shares of Common Stock, voting as a
single class, without the vote of the Class B and Class C Preferred Stock. The
holders of outstanding shares of Common Stock are entitled to one vote for each
share held by them on the record date with respect to the election of directors.
Cumulative voting applies in the election of the three directors to be
elected by the holders of outstanding shares of Preferred Stock and the seven
directors to be elected by holders of outstanding shares of Common Stock.
Cumulative voting means that a stockholder may multiply the number of votes to
which such stockholder is entitled by virtue of his share ownership by the
number of directors to be elected by such stockholder and cast this total number
of votes for any one nominee, or may distribute the total number of votes, in
any proportion, among as many nominees as the stockholder desires, up to the
number of directors to be elected.
Cumulative voting does not apply with respect to the ratification of the
appointment of auditors, approval of the 1995 Stock Incentive Plan, or any other
matter that may properly come before the meeting (other than the election of
directors), and in such cases the holders of outstanding shares of Common Stock
and Class B and Class C Preferred Stock shall vote together as one class and
each holder of shares of Class B and Class C Preferred Stock shall be entitled
to the number of votes that such holder would have if such holder had converted
its Preferred Stock into Common Stock immediately prior to the record date (SEE
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT). The holders of
outstanding shares of Common Stock are entitled to one vote for each share held
by them on the record date with respect to the ratification of auditors,
approval of the 1995 Stock Incentive Plan, and any other such matters that may
properly come before the meeting.
<PAGE> 5
The holders of a majority of the outstanding shares of stock, determined as
if each holder of shares of Class B and Class C Preferred Stock had converted
said Preferred Stock into Common Stock immediately prior to the record date for
such meeting, present in person or by proxy, shall constitute a quorum.
Abstentions and broker non-votes count in the determination of a quorum.
ITEM I. ELECTION OF DIRECTORS
(PROPOSAL 1 ON FORM OF PROXY CARD)
Under the Amended By-Laws of Ashland Coal, until otherwise fixed by the
Board of Directors, the number of directors constituting the whole Board shall
be ten. The Board has not determined otherwise. Each director holds office until
his successor is elected and qualified. The directors who are seeking reelection
at the 1995 Annual Meeting are Messrs. J. A. Brothers, Robert A. Charpie, Paul
W. Chellgren, Thomas L. Feazell, Juan Antonio Ferrando, Robert L. Hintz, William
C. Payne, J. Marvin Quin and Robert E. Yancey, Jr. Mr. Thomas Marshall has been
nominated by the Board of Directors for election by the holders of Common Stock
at the 1995 Annual Meeting. All of the nominees have consented to serve if
elected and all of them except Messrs. Brothers and Marshall were elected
Directors at last year's Annual Meeting of Stockholders. Mr. Michael G. Ziesler,
a member of the Board of Directors since 1992, and Mr. Werner Externbrink, a
member of the Board since 1993, both resigned from the Board and the Committees
on which they served on February 8, 1995, in connection with the sale by
Saarbergwerke AG of its 150 shares of Ashland Coal Class B Preferred Stock to
Ashland Inc., and Mr. Brothers was elected by the holders of the Class B and
Class C Preferred Stock to fill one of the vacancies created by the resignations
of Messrs. Ziesler and Externbrink.
With respect to the directors to be elected by the holders of outstanding
shares of Class B and Class C Preferred Stock, the three persons receiving the
greatest number of votes cast by holders of outstanding shares of Class B and
Class C Preferred Stock, present or represented at the Annual Meeting, shall be
elected as directors. With respect to the directors to be elected by the holders
of outstanding shares of Common Stock, the seven persons receiving the greatest
number of votes cast by the holders of the outstanding shares of Common Stock,
present or represented at the Annual Meeting, shall be elected as directors.
Holders of Class B and Class C Preferred Stock and holders of Common Stock
voting at the Annual Meeting may not vote for more than the respective number of
nominees listed in the Proxy Statement to be elected by the holders of
outstanding shares of Class B and Class C Preferred Stock and Common Stock,
respectively. Abstentions and broker non-votes are not counted as votes cast
either for or against a nominee for election as a director.
It is the intention of the persons named in the enclosed form of proxy
(Messrs. Paul W. Chellgren and William C. Payne), unless otherwise instructed in
any form of proxy, to vote FOR the election of the three nominees described
herein to be elected by holders of outstanding shares of Class B and Class C
Preferred Stock and FOR the seven nominees to be elected by holders of
outstanding shares of Common Stock. Such proxy holders also may vote such shares
cumulatively for less than the entire number of nominees if any situation arises
which, in the opinion of the proxy holders, makes such action necessary or
desirable. Ashland Coal has no reason to believe that any of the nominees will
not be available for election as directors. Ashland Coal is soliciting and the
proxy holders are being granted discretionary authority to cumulate and to vote
the shares of stock as they determine. If stockholders do not wish to confer
authority to cumulate their votes to Messrs. Chellgren and Payne as provided in
the proxy, stockholders may exercise their right to cumulate votes in the
election of directors by attending the meeting and voting in person.
2
<PAGE> 6
NOMINEES FOR DIRECTOR
The following information is provided regarding each nominee for election
as a director by holders of outstanding shares of Class B and Class C Preferred
Stock:
J. A. "FRED" BROTHERS, Senior Vice President and Group
Operating Officer of Ashland Inc. since 1988; a Director of
Ashland Coal since February 1995. Director, Society Bank
N.A., and Geon Corp. Age 54.
--------------------------------------------------------------------------------
JUAN ANTONIO FERRANDO, Director of Carboex International,
Ltd.; Senior Vice President, Business Development, Sociedad
Espanola de Carbon Exterior, S.A. (a coal supply firm
controlled by a Spanish state-owned corporation, and the
owner of Carboex International, Ltd.) since 1986; during
the past five years, has served in a variety of managerial
positions in Desarrollo de Operaciones Mineras, S.A. (a
coal mining company with operations in Spain and other
countries); a Director of Ashland Coal since 1988.
Director, Granitos Espanoles, S.A. (a Spanish company which
produces and sells granite). Age 53.
--------------------------------------------------------------------------------
J. MARVIN QUIN, Senior Vice President and Chief Financial
Officer of Ashland Inc. since 1992; Administrative Vice
President and Treasurer of Ashland Inc. from 1987 to 1992;
a Director of Ashland Coal since 1992. Director, Kentucky
Electric Steel, Inc. Age 47.
--------------------------------------------------------------------------------
3
<PAGE> 7
The following information is provided regarding each nominee for election
as a director by holders of outstanding shares of Common Stock:
ROBERT A. CHARPIE, Chairman of Ampersand Ventures, Inc. (a
venture capital company); retired in September 1988 as
Chairman of Cabot Corporation; a Director of Ashland Coal
since 1988. Director, Cabot Corporation, Champion
International Corporation, Ceramics Process Systems
Corporation, Daniel Products Company, Inc. and Federated
Department Stores, Inc. Age 69.
--------------------------------------------------------------------------------
PAUL W. CHELLGREN, President and Chief Operating Officer of
Ashland Inc. since 1992; Senior Vice President and Chief
Financial Officer of Ashland Inc. from 1988 to 1992;
Chairman of the Board of Ashland Coal from 1982 to 1992; a
Director of Ashland Coal since 1981. Director, Ashland Inc.
Age 52.
--------------------------------------------------------------------------------
THOMAS L. FEAZELL, Senior Vice President, General Counsel
and Secretary of Ashland Inc. since 1992; Administrative
Vice President and General Counsel of Ashland Inc. from
1988 to 1992; a Director of Ashland Coal since 1981.
Director, National City Bank of Ashland, Kentucky. Age 58.
--------------------------------------------------------------------------------
ROBERT L. HINTZ, Chairman of the Board of R. L. Hintz &
Associates (a management consulting firm) since 1989;
retired in 1988 as Executive Vice President of CSX
Corporation. A Director of Ashland Coal since 1993.
Director, Reynolds Metals Corporation, Scott &
Stringfellow, Inc. and Chesapeake Corporation. Age 64.
--------------------------------------------------------------------------------
4
<PAGE> 8
THOMAS MARSHALL, Chairman of the Board of Aristech Chemical
Corporation since 1986; Chief Executive Officer of Aristech
Chemical Corporation from 1986 to 1994. Director, PNC Bank
Corp. and Allegheny Ludlum Corporation. Age 66.
--------------------------------------------------------------------------------
WILLIAM C. PAYNE, Chairman of the Board of Ashland Coal
since 1992; President and Chief Executive Officer and a
Director of Ashland Coal since 1987. Age 62.
--------------------------------------------------------------------------------
ROBERT E. YANCEY, JR., Senior Vice President and Group
Operating Officer of Ashland Inc. and President of Ashland
Petroleum Company, a division of Ashland Inc., since 1986;
a Director of Ashland Coal since 1987. Age 49.
Except as otherwise indicated, the nominees have held the principal
occupations described above during the past five years. Ashland Inc. owns
approximately 54 percent of the outstanding shares of Common Stock of Ashland
Coal, assuming conversion to Common Stock at the current conversion rates of the
Class B and Class C Preferred Stock. (SEE SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT).
5
<PAGE> 9
INFORMATION CONCERNING THE BOARD OF DIRECTORS
MEETINGS AND COMMITTEES
During the year ended December 31, 1994, six meetings of the Board of
Directors were held. The standing committees of the Board of Directors are the
Audit Committee, Executive Committee, Finance Committee, Key Employee Stock
Administration Committee, Nominating Committee and Personnel and Compensation
Committee. In addition, a Technical Committee, which includes persons who are
not Directors, acts in an advisory capacity to the Board. The Audit Committee
met three times, the Personnel and Compensation Committee met five times, the
Key Employee Stock Administration Committee met four times, and the Finance
Committee met four times. The Nominating Committee and the Executive Committee
did not meet during 1994. A special committee consisting of Messrs. Charpie,
Ferrando, Hintz, and Ziesler created by the Board to consider and make a
recommendation with respect to a proposed combination of Ashland Coal and Arch
Mineral Corporation (a company in which Ashland Inc. owns a significant
interest) met two times. The Technical Committee did not meet in 1994. Each
nominee attended more than 75 percent of the total meetings of the Board and the
Committees on which he served. Overall attendance at Board and Committee
meetings during 1994 was over 98 percent.
During 1994, the Audit Committee was composed of Mr. Hintz (Chairman) and
Messrs. Charpie, Ferrando and Quin. Mr. Brothers was elected to the Audit
Committee in February 1995. Its duties include recommending Ashland Coal's
independent auditors, reviewing the scope and results of external and internal
audits, reviewing internal accounting controls, reviewing significant changes in
accounting principles, approving in advance all substantial services which are
not audit-related to be provided by the independent auditors, obtaining reports
on legal compliance and reviewing audit fees and services provided by
independent auditors.
During 1994, the Executive Committee was composed of Mr. Payne (Chairman)
and Messrs. Chellgren and Ziesler. Mr. Ziesler resigned from this Committee when
he resigned from the Board, and Mr. Ferrando was elected to the Committee in
February 1995 to replace Mr. Ziesler. The Executive Committee, to the extent
permitted by law and Ashland Coal's Amended By-laws and Restated Certificate of
Incorporation, as amended, has and may exercise such powers and authority as the
Board of Directors shall from time to time determine.
The Finance Committee is composed of Mr. Charpie (Chairman) and Messrs.
Chellgren, Ferrando, Payne, and Quin. Mr. Ziesler resigned from this Committee
when he resigned from the Board. The duties of this Committee include, in
addition to such responsibilities as may be delegated to it from time to time by
the Board of Directors, the review of Ashland Coal's current fiscal policies,
financing and capital structure, and current and contemplated financial
requirements, as well as evaluation of, and recommendations respecting,
significant financial matters. The recommendations of the Finance Committee are
subject to the review and approval of the Board of Directors.
The Key Employee Stock Administration Committee is composed of Mr. Charpie
(Chairman) and Mr. Hintz. Mr. Ziesler resigned from this Committee when he
resigned from the Board. The duties of this Committee include the responsibility
for approving awards and participation under Ashland Coal's 1988 Stock Incentive
Plan for Key Employees. It also considered and recommended to the Board of
Directors for approval the terms of the 1995 Stock Incentive Plan which is
submitted to the Stockholders for approval as Item II. If the 1995 Stock
Incentive Plan is approved by Ashland Coal's stockholders, this Committee will
perform similar duties with respect to that Plan.
The Nominating Committee is composed of Mr. Chellgren (Chairman) and
Messrs. Charpie and Ferrando. The duties of this Committee include the
responsibility of recommending nominees for membership to the Board of
Directors.
The Personnel and Compensation Committee is composed of Mr. Feazell
(Chairman) and Messrs. Charpie and Yancey. Mr. Ziesler resigned from this
Committee when he resigned from the Board. The duties of this Committee include
the approval of salaries of all principal officers, and employees of Ashland
Coal and its subsidiaries above specified dollar levels, and all awards and
participation under Ashland Coal's incentive
6
<PAGE> 10
plans, except for awards and participation under Ashland Coal's 1988 Stock
Incentive Plan for Key Employees (which is administered by the Key Employee
Stock Administration Committee). The Personnel and Compensation Committee also
makes recommendations with respect to compensation policies, position
evaluations, transfers, promotions, and terminations of senior executives. In
addition, it administers various Ashland Coal employee compensation plans and
various benefit plans, such as retirement and saving plans, including
contribution levels, determination of investment guidelines, selection of
investment managers and the review of their performances.
The Technical Committee is composed of individuals who are not Directors,
Mr. Michael F. Moran, Vice President of Ashland Coal, and Mr. Jose Fernandez
Olano, Technical Director of Sociedad Espanola de Carbon Exterior, S.A. Mr.
Harold Jurecka, who is a Bergwerksdirektor (general manager of central mine
services department) with Saarbergwerke AG resigned from the Committee effective
February 8, 1995. The Technical Committee serves in an advisory capacity to the
Board on significant projects, investments, acquisitions, and other matters
requiring action by the Board. This Committee cannot exercise any of the powers
of the Board of Directors.
7
<PAGE> 11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth certain information as of February 28, 1995,
unless otherwise noted, concerning ownership of Ashland Coal's outstanding Class
B Preferred Stock, outstanding Class C Preferred Stock, Common Stock into which
Class B Preferred Stock and Class C Preferred Stock may be converted
(hereinafter referred to as Equivalents) and outstanding Common Stock. Except
for the Equivalents and the Common Stock which may be acquired by means of
dividend reinvestments under the Ashland Coal Dividend Reinvestment and Stock
Purchase Plan in respect of dividends declared to holders of record on a record
date after February 28, 1995, the listed persons have no other right to acquire
beneficial ownership of Common Stock of Ashland Coal exercisable within 60 days
after February 28, 1995. Common Stock and Equivalents Beneficially Owned and
Percentage of Common Stock and Equivalents are calculated assuming full
conversion of the Class B and the Class C Preferred Stock at the current
conversion rate. On February 8, 1995, Ashland Inc. (formerly Ashland Oil, Inc.)
purchased from Saarbergwerke AG, all of the issued and outstanding shares of
Class B Preferred Stock for about $110 million. As a result, Ashland Inc. now
owns Common Stock and Equivalents representing about 54 percent of the voting
power of Ashland Coal, and has the power to elect a majority of the Board of
Directors. As a result of this transaction, Ashland Inc. will consolidate
Ashland Coal's financial statements into Ashland Inc.'s financial statements. If
the Equivalents are excluded from the computation of Percentage of Common Stock
and Equivalents, Ashland Inc. owns approximately 52 percent of the Common Stock.
Each stockholder has sole voting and dispositive power with respect to the stock
listed next to its or his name unless otherwise noted.
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK APPROXIMATE
PREFERRED STOCK AND EQUIVALENTS PERCENTAGE OF
BENEFICIALLY BENEFICIALLY COMMON STOCK
NAME AND ADDRESS OWNED OWNED AND EQUIVALENTS
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Ashland Inc.(1) 150(Class B) 9,851,771(2) 54%
P. O. Box 391
Ashland, Kentucky 41114
Carboex International, Ltd.(3) 100(Class C) 1,834,600(4) 10%
Bolan House
P. O. Box N-3010
Nassau, Bahamas
Dalton, Grenier, Hartman, Maher & Co. 0 876,300 5%
630 Fifth Ave., Suite 3425
New York, New York 10111
J. A. Brothers(1) 0 2,059 *
Robert A. Charpie 0 10,000 *
Paul W. Chellgren(1) 0 5,146(5) *
Thomas L. Feazell(1) 0 509 *
Juan Antonio Ferrando.(3) 0 0 0%
Robert L. Hintz 0 1,000 *
Thomas Marshall 0 2,500 *
William C. Payne 0 89,750(6) *
J. Marvin Quin(1) 0 500 *
Robert E. Yancey, Jr.(1) 0 1,000 *
Kenneth G. Woodring 0 46,625(7) *
C. Henry Besten, Jr. 0 33,120(8) *
Marc R. Solochek 0 26,765(9) *
Roy F. Layman 0 31,255(10) *
All Executive Officers and Directors as a 0 250,229(11) 1%
group (14 persons)
---------------------------------------------------------------------------------------------------
8
<PAGE> 12
<FN>
(1) Messrs. Brothers, Chellgren, Feazell, Quin, and Yancey, directors of
Ashland Coal, are executive officers of Ashland Inc., and to the extent
they may be deemed to be control persons of Ashland Inc., they may be
deemed to be beneficial owners of shares owned by Ashland Inc. Each of
Messrs. Brothers, Chellgren, Feazell, Quin, and Yancey disclaims
beneficial ownership of such stock.
(2) This amount includes 6,923,000 shares of Common Stock held directly by
Ashland Inc., 176,871 shares of Common Stock held by Ashland Inc.
through Ashland Coal's Dividend Reinvestment and Stock Purchase Plan,
and the Common Stock equivalent of 150 shares of Class B Preferred Stock
currently convertible at the rate of 18,346 shares of Common Stock for
each share of Class B Preferred Stock. Ashland Inc. is the only holder
of Ashland Coal's Class B Preferred Stock.
(3) Mr. Ferrando, a director of Ashland Coal, is a director of Carboex
International, Ltd., and to the extent he may be deemed to be a control
person of Carboex, he may be deemed to be a beneficial owner of shares
owned by Carboex. Mr. Ferrando disclaims beneficial ownership of such
shares.
(4) The Common Stock equivalent of 100 shares of Class C Preferred Stock
currently convertible at the rate of 18,346 shares of Common Stock for
each share of Class C Preferred Stock. Carboex International, Ltd. is
the only holder of Ashland Coal's Class C Preferred Stock.
(5) Includes 1,029 shares owned by members of Mr. Chellgren's family for
which he disclaims beneficial ownership.
(6) Includes 79,750 shares subject to currently exercisable stock options.
(7) Includes 43,625 shares subject to currently exercisable stock options.
(8) Includes 4,150 shares, as of December 31, 1994, held by Mr. Besten under
Ashland Coal's Employee Thrift Plan, which provides participants with
voting and investment power with respect to such shares, and 27,750
shares subject to currently exercisable stock options.
(9) Includes 3,016 shares, as of December 31, 1994, held by Mr. Solochek
under Ashland Coal's Employee Thrift Plan, which provides participants
with voting and investment power with respect to such shares, and 23,500
shares subject to currently exercisable stock options.
(10) Includes 51 shares owned by members of Mr. Layman's family for which Mr.
Layman disclaims beneficial ownership, 652 shares, as of December 31,
1994, held by Mr. Layman under Ashland Coal's Employee Thrift Plan,
which provides participants with voting and investment power with
respect to such shares, and 30,500 shares subject to currently
exercisable stock options.
(11) Includes 1,080 shares owned by family members of persons in the group
for which such persons disclaim beneficial ownership, 7,818 shares, as
of December 31, 1994, held by Executive Officers under Ashland Coal's
Employee Thrift Plan, which provides participants with voting and
investment power with respect to such shares, and 205,125 shares subject
to currently exercisable stock options.
* Represents less than 1 percent of the total number of shares of Common
Stock and Equivalents outstanding.
</TABLE>
During 1994, Marc R. Solochek, Senior Vice President and Chief Financial
Officer, failed to timely file a Form 4 with respect to the sale of 200 shares
of Ashland Coal common stock. Mr. Solochek exercised a stock option for 1,000
shares on October 6, 1994. During the five day period of October 31 through
November 4, 1995, Mr. Solochek sold 200 shares each day. A Form 4 showing such
exercise was timely filed in November to report the October exercise of the
option, but the October sale was not reported. At the time of preparation of the
Form 4 to report the November sales Mr. Solochek realized he had forgotten to
report the October sale of 200 shares on the Form 4 filed in November. When he
timely filed his Form 4 in December to report the November sales, Mr. Solochek
also filed an amendment to the Form 4 filed in November to reflect the October
sale of 200 shares.
9
<PAGE> 13
RESTATED SHAREHOLDERS AGREEMENT
Ashland Inc., Carboex International, Ltd. (Carboex) and Saarbergwerke AG
(Saarberg) (together, the Principal Shareholders) and Ashland Coal are parties
to a Restated Shareholders Agreement, as amended (Shareholders Agreement)
imposing certain restrictions on the disposition of Ashland Coal capital stock
held by them. The Shareholders Agreement also binds transferees of the Principal
Shareholders and applies to all shares of capital stock of Ashland Coal,
including any shares of Common Stock into which the Class B and Class C
Preferred Stock may be converted. The Shareholders Agreement also restricts
Ashland Coal's business to coal mining, processing, and marketing and related
business activities.
Under the Shareholders Agreement, a Principal Shareholder may dispose of
its shares without consent of the other Principal Shareholders in an
underwritten public offering; with certain limits, in resales exempt from
registration under the Securities Act of 1933 (the Act) under Rule 144 thereof;
or to buyers who with their affiliates would own fewer than 500,000 common
shares after the disposition.
REGISTRATION RIGHTS AGREEMENT
Ashland Coal, Ashland Inc., and Carboex are parties to a Registration
Rights Agreement, effective on July 1, 1994, pursuant to which Ashland Coal
granted to each of Ashland, Inc. and Carboex "demand" and "piggyback-on-demand"
registration rights requiring Ashland Coal to register common stock held by the
Principal Shareholders under the Act for sale to the public, as well as certain
"incidental" registration rights entitling the Principal Shareholders to
register common stock (subject to limitations on the number registered) in
offerings by Ashland Coal or other holders of registration rights.
10
<PAGE> 14
PERSONNEL AND COMPENSATION COMMITTEE
AND
KEY EMPLOYEE STOCK ADMINISTRATION COMMITTEE
REPORT ON
EXECUTIVE COMPENSATION FOR 1994
GENERAL
The Personnel and Compensation Committee (P&C Committee) is composed
entirely of outside directors and has the responsibility, among others, for
approving Ashland Coal's executive compensation program, except for the grant of
stock options. The Key Employee Stock Administration Committee (KESA Committee),
which is also composed entirely of outside directors, is responsible for
approving grants of stock options under Ashland Coal's 1988 Stock Incentive Plan
for Key Employees, and will be responsible for approving grants under the
proposed 1995 Stock Incentive Plan if it is approved by the Stockholders. The
members of these committees are free from interlocking or other relationships
that might be considered a conflict of interest.
The compensation of Ashland Coal's executives is reviewed and approved
annually. In 1994, Ashland Coal again retained an executive compensation
consultant to advise the P&C Committee on the executive compensation program and
the KESA Committee on stock awards to key executives.
COMPENSATION PRINCIPLES
The fundamental objectives of Ashland Coal's compensation program are to
attract, retain and motivate key executives to enhance long-term profitability
and stockholder value. The compensation program:
- provides for a base level of compensation that is competitive with other
similarly sized publicly traded industrial companies, particularly those
in the coal mining industry, and compensates key executives based on
their level of responsibility;
- links executives' compensation to the operating and financial performance
of Ashland Coal by making significant elements of their compensation
sensitive to the performance of the company; and
- rewards the executives for both short-term and long-term enhancement of
shareholder value.
Presently, the executive compensation program consists of four principal
components:
- annual salary
- annual incentive compensation
- medium-term incentive compensation
- stock options
ANNUAL SALARY
Annual salaries for executive officers other than the President and Chief
Executive Officer (CEO) are determined by the P & C Committee's independent
consideration of the executive's performance of his duties (as reported by the
CEO), responsibilities and experience; the historical compensation levels of
Ashland Coal; and a consultant's report of the median range of the salaries for
similarly situated executives as determined from surveys of salaries for
executives in the mining and coal industries and other industrial companies,
including anticipated estimated salary increases given or to be given in such
industries in the current year (such factors being collectively referred to as
Salary Factors). Annual salaries are not based on specific measures of corporate
performance, but, notwithstanding the Salary Factors, annual salaries could be
frozen, reduced, or increased by a smaller increment than otherwise would be the
case, in the P & C Committee's sole discretion, as a result of poor corporate
performance. Individual performance of an executive is not measured by specific
quantitative criteria, but is qualitatively assessed. The CEO's compensation,
including his annual salary, is discussed later in this report.
11
<PAGE> 15
Each February, the determination of annual salaries begins with the CEO's
evaluation of each executive officer's performance of his duties for the
preceding year and a comparison of his salary with salaries of similarly
situated executives as reported in compensation surveys conducted by entities
not associated with Ashland Coal and a compensation report by its compensation
consultant. The companies included in these compensation surveys are selected by
such unrelated entities, and the total number of companies surveyed is larger
than the peer group of issuers selected by Ashland Coal for comparison in the
Cumulative Total Return graph included later in this Proxy Statement. The CEO
then makes recommendations to the P&C Committee which may approve his
recommendations or set salaries at levels different than the CEO's
recommendations.
The P&C Committee reviews the CEO's recommendations with the CEO, including
the CEO's justification and support for them. The P&C Committee does not give a
specified weight to the individual Salary Factors. The individual performance of
any executive is measured by the extent to which the individual discharges his
or her duties. With respect to 1994 salary recommendations, the P&C Committee
did not follow all of Mr. Payne's recommendations. The salaries of the Ashland
Coal executives as determined by the P&C Committee are generally tied to the
median level of salaries indicated by the surveys as reported by the
compensation consultant to the P&C Committee.
ANNUAL INCENTIVE COMPENSATION
This component of the executive compensation program provides short-term
incentives under the Incentive Compensation Program for Key Employees (Incentive
Compensation Program). The executives named in the Summary Compensation Table
(Summary Table) set forth later in this Proxy Statement, together with
twenty-four other key employees of Ashland Coal designated by the P & C
Committee, are provided an opportunity to earn incentive cash compensation based
on individual and company performance. In determining the annual incentive
compensation award to any individual, a minimum company performance level must
be met, and assuming it is met, an individual's level of responsibilities,
company performance and individual performance are considered in determining the
amount of the award. There are presently six levels in the Incentive
Compensation Program. The P&C Committee determines at the beginning of each year
the level within the Incentive Compensation Program at which each participant is
placed based on the participant's potential to affect profitability. All other
performance factors being equal, the maximum achievable incentive award
increases based on increasing levels of potential to affect profitability. In
addition, in respect of the performance factors, company performance is given
twice the weight of individual performance. In the cases of Messrs. Payne and
Woodring (as well as two other persons not named in the Summary Table), the
environmental and safety performances of the operating subsidiaries also are
taken into account in making incentive compensation awards.
Each February the P&C Committee sets a minimum company performance standard
(hurdle) that must be met before any incentive compensation may be awarded. For
1994, company performance was measured against a profit before tax hurdle and
exceeded the hurdle by about 9 percent, and awards were paid in March of 1995.
The determination of individual performance for purposes of incentive
compensation awards is based upon the CEO's evaluation of the extent to which an
individual successfully discharges his or her duties. There are no specific
quantitative criteria by which individual performance is measured for purposes
of incentive compensation, but such performance is qualitatively assessed. The
P&C Committee may reject the CEO's recommendations on individual performances if
it does not concur, and the P & C Committee's decision is final.
A participant's payout at his participation level is a function of the
weighted combined company and individual performance score (expressed as a
percentage) and the participant's salary. The Incentive Compensation Program
provides that total payments are not to exceed 6 percent of net income of
Ashland Coal, excluding nonoperating items. For 1994, the minimum company
performance standard was exceeded and incentive compensation awards were paid.
The P&C Committee may adjust, at its discretion, the minimum company performance
standard and payments under this Program. No such adjustments have been made
during the last three years.
12
<PAGE> 16
With respect to total annual cash compensation paid to Messrs. Payne,
Woodring, Besten, Solochek, and Layman for 1994, approximately 27 percent, 22
percent, 25 percent, 23 percent and 19 percent, respectively, was
performance-sensitive under the Incentive Compensation Program. For the
three-year period covered by the Summary Table, the portion of total annual cash
compensation which was performance sensitive under the Incentive Compensation
Program was 26 percent, 23 percent, 24 percent, 21 percent and 20 percent,
respectively, for the named executives.
PERFORMANCE UNIT PLAN
This component of the executive compensation program seeks to reward
executives for successful medium-term strategic planning and operating
performance by Ashland Coal. Only company performance is taken into account in
determining payments under Ashland Coal's Performance Unit Plan (Performance
Plan). Under the Performance Plan, executives designated by the P & C Committee
(currently eight persons in addition to the named individuals) are awarded
performance units contingent upon the level of Ashland Coal's future
performance.
The number of performance units awarded to a participant is based on that
individual's level of responsibility. Performance units awarded are established
in dollars and are based on the participant's base salary on the date of the
award. The original amount of any award may not exceed 400 percent of the
employee's then base salary. Historically, performance units have been awarded
every two years and each award covers a four-year performance cycle.
Performance measures and the time period over which performance is to be
measured are determined by the P&C Committee. Performance measures may include,
but shall not be limited to, return on net assets employed, cumulative earnings
per share, and return on equity (ROE). The present plan cycles use ROE as the
performance measure. Below a "hurdle" rate of return, there is no payment, and
at or above a "target" rate of return, 100 percent of the award is earned.
Below-target payouts are earned for company performance between the hurdle and
target, depending on the level of performance.
The amount paid out upon meeting the performance measures cannot exceed the
original amount of such award, and the total amount of payments under the
Performance Plan for each award period shall not exceed 2 percent of
stockholders' equity of Ashland Coal as shown in its Annual Report to
Stockholders at the end of the fiscal year next preceding the commencement of
such award period. Payments with respect to performance units may be made in one
or more installments and may be made wholly in cash, wholly in shares of Ashland
Coal Common Stock or partly in cash and partly in such shares, at the discretion
of the P&C Committee and as permitted by applicable securities laws. No Common
Stock has been authorized by Ashland Coal's Board of Directors for issuance
under the Performance Plan. Under the Performance Plan, the P&C Committee can
adjust, at its discretion, the performance measures set and payments made for
any cycle. There have been no such adjustments made during the last three years.
Although the Performance Plan permits awards of up to 400 percent of a
participant's salary, the maximum award has not exceeded 160 percent. In 1993,
payments were made with respect to the 1989-1992 Performance Plan cycle (which
also included the last three months of 1988), and in 1995, payments were made
with respect to the 1991-1994 Performance Plan cycle because the respective ROE
hurdles were achieved. Payments under the plan cycle for 1993-1996 approved in
1993, if earned, will be made in 1997, and payments under the 1995-1998 plan
cycle approved in 1995 will be made, if earned, in 1999.
When payments under the Performance Plan for the 1989-1992 cycle and the
1991-1994 cycle are prorated among the years covered by those cycles,
approximately 34 percent, 30 percent, 30 percent, 28 percent and 26 percent of
the total cash compensation paid to Messrs. Payne, Woodring, Besten, Solochek,
and Layman, respectively, for the years shown in the Summary Table was sensitive
to company performance.
STOCK INCENTIVE PLAN FOR KEY EMPLOYEES
Stock options tie the interests of key employees of Ashland Coal to the
interests of its stockholders by providing value to an employee when the stock
price appreciates. This element of the compensation program
13
<PAGE> 17
provides longer-term incentives. The 1988 Stock Incentive Plan for Key Employees
(Stock Incentive Plan) provides for the grant of stock options and stock
appreciation rights (SARs) and awards of restricted stock. The KESA Committee is
responsible for administering the Stock Incentive Plan and making grants or
awards thereunder. All stock options are granted with an exercise price equal to
the fair market value of Ashland Coal's Common Stock on the date of grant.
All salaried employees of Ashland Coal and its subsidiaries (including the
executives named in the Summary Table) are eligible to participate in the Stock
Incentive Plan. Two types of options -- incentive stock options and nonqualified
stock options -- may be granted under the Stock Incentive Plan. The ultimate
value of the options depends on the ultimate value of the underlying stock of
Ashland Coal, thus aligning the interests of the stockholders and the
executives.
The KESA Committee, in its discretion, determines the salaried employees
who are granted options, or options and SARs, or who are awarded shares of
restricted stock under the Stock Incentive Plan. The stock options granted to
executives in 1994 were not based on past company performance. The number of
options to be granted to executives is discretionary with the KESA Committee,
but the number of options awarded is generally based upon the participation
level to which an executive is assigned. This level is determined by the
executive's potential to affect profitability, as well as the number of options
already outstanding or previously granted to the executive. These factors were
considered in making 1994 option awards. The KESA Committee also reserves the
right to make awards that deviate from the level-based awards depending upon an
executive's individual performance.
At its December 1994 meeting, the KESA Committee approved a new 1995 Stock
Incentive Plan and recommended that the Board of Directors of Ashland Coal also
approve it. The Board did so at its December 1994 meeting. Submission of the
1995 Stock Incentive Plan for approval by the Stockholders is discussed in
further detail in Item II at page 20 of this Proxy Statement.
CEO COMPENSATION
As with the other executives, the Salary Factors are the only factors
routinely considered by the P&C Committee in setting the annual salary of the
CEO, but notwithstanding the Salary Factors, the CEO's annual salary could be
frozen, reduced, or increased by a smaller increment than otherwise would be the
case, in the Committee's sole discretion, as a result of poor corporate
performance. The CEO's individual performance in discharging his duties as CEO
is assessed by the P&C Committee in determining his annual salary and incentive
compensation awards. As is the case with other executives, no specific objective
or other criteria is used by the P&C Committee in assessing the individual
performance of the CEO. In determining the CEO's incentive compensation, company
performance is given twice the weight of individual performance, as for any
other executive, but the CEO's incentive compensation is further subject to
adjustment upward or downward in the Committee's sole discretion (and without
specific weighting factors) depending upon the environmental and safety
performance of the operating subsidiaries. Awards of performance units under the
Performance Plan are higher for the CEO than for other executives because the
CEO bears the highest degree of responsibility among Ashland Coal's executives
for both strategic planning and overall operating performance. The number of
options awarded under the Stock Incentive Plan to the CEO is higher than for any
other executive because of the potential effect of his performance upon
profitability and is also affected by the total number of options outstanding or
previously granted to the CEO.
This Report is submitted by the Personnel and Compensation Committee with
respect to all matters set forth in the Report, except for those matters related
to stock options, and by the Key Employee Stock Administration Committee only
with respect to stock options.
<TABLE>
<CAPTION>
PERSONNEL AND KEY EMPLOYEE STOCK
COMPENSATION COMMITTEE ADMINISTRATION COMMITTEE
---------------------- ------------------------
<S> <C>
Thomas L. Feazell (Chairman) Robert A. Charpie (Chairman)
Robert A. Charpie Robert L. Hintz
Robert E. Yancey, Jr.
</TABLE>
14
<PAGE> 18
SUMMARY COMPENSATION TABLE
--------------------------
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION -------------------- -------
------------------------------------------- RESTRICTED
OTHER ANNUAL STOCK LTIP ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS(1) COMPENSATION AWARD(S) OPTIONS PAYOUTS COMPENSATION(4)
YEAR ($) ($) ($) (#) (#) ($) ($)
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William C. Payne 1994 294,423 110,000 -0- -0- 15,000 90,176(2) 12,366
Chairman 1993 279,481 75,000 -0- -0- 15,000 -0- 11,738
President & CEO 1992 264,596 110,000 -0- -0- 10,000 262,208(3) 11,113
Kenneth G. Woodring 1994 224,423 64,128 -0- -0- 7,500 56,783(2) 9,426
Senior Vice President 1993 209,654 52,927 -0- -0- 6,500 -0- 8,805
1992 199,327 69,481 -0- -0- 5,000 168,419(3) 8,372
C. Henry Besten, Jr. 1994 164,500 54,177 -0- -0- 5,000 43,961(2) 6,909
Senior Vice President 1993 151,758 38,309 -0- -0- 5,000 -0- 6,374
1992 144,596 50,374 -0- -0- 4,000 102,681(3) 6,073
Marc R. Solochek 1994 164,500 49,227 -0- -0- 5,000 34,661(2) 4,606
Senior Vice President 1993 151,758 34,919 -0- -0- 4,000 -0- 4,249
& CFO 1992 144,798 39,233 -0- -0- 3,000 109,749(3) 4,054
Roy F. Layman 1994 149,615 34,807 -0- -0- 4,000 30,988(2) 6,284
Admin. Vice President 1993 139,654 27,495 -0- -0- 4,000 -0- 5,865
& Secretary 1992 129,789 39,508 -0- -0- 3,000 91,875(3) 5,452
<FN>
(1) These amounts represent the amount of money earned under the Ashland Coal,
Inc. Incentive Compensation Program for Key Employees with respect to the
subject year and paid in the immediately succeeding year.
(2) This amount represents the amount paid in 1995 for the four years of the
1991-1994 plan cycle under the Ashland Coal, Inc. Performance Unit Plan.
(3) This amount represents the amount of money earned under the Ashland Coal,
Inc. Performance Unit Plan for the 1989-1992 plan cycle. This cycle also
included the last three calendar months of 1988. About 79 percent of the
stated amounts was accelerated and paid in 1992, and the remainder was
paid in 1993.
(4) These amounts represent contributions by Ashland Coal to the named
executive's account under the Ashland Coal Employee Thrift Plan. For
information concerning supplemental retirement benefits payable to Mr.
Payne following retirement, SEE EMPLOYMENT CONTRACTS AND TERMINATION OF
EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS.
</TABLE>
15
<PAGE> 19
OPTION GRANTS IN LAST FISCAL YEAR
---------------------------------
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------------------------------------
% OF POTENTIAL REALIZABLE
TOTAL VALUE AT ASSUMED
OPTIONS ANNUAL RATES OF STOCK
GRANTED TO EXERCISE PRICE APPRECIATION FOR
OPTIONS EMPLOYEES OR BASE OPTION TERM
GRANTED IN FISCAL PRICE EXPIRATION --------------------
NAME (#)(1) YEAR ($/SH) DATE 5%($) 10%($)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
William C. Payne 15,000 15.5 28.50 3/24/2003 268,852 681,325
Kenneth G. Woodring 7,500 7.8 28.50 3/24/2003 134,426 340,662
C. Henry Besten, Jr. 5,000 5.2 28.50 3/24/2003 89,617 227,108
Marc R. Solochek 5,000 5.2 28.50 3/24/2003 89,617 227,108
Roy F. Layman 4,000 4.1 28.50 3/24/2003 71,694 181,687
<FN>
(1) The options are not exercisable at all during the first year following the
date of the grant, are exercisable with respect to 50 percent of the
underlying shares after the first anniversary date of the grant and until
the second anniversary, and are exercisable between the second and third
anniversaries of the grant with respect to an additional 25 percent of the
underlying shares. After the third anniversary of the date of the grant, the
options are exercisable with respect to 100 percent of the underlying
shares.
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
-----------------------------------------------
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
SHARES NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED OPTIONS AT FY-END(#) AT FY-END($)
ON VALUE ---------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
William C. Payne 6,000 107,250 66,000 25,000 570,000 22,500
Kenneth G. Woodring -0- -0- 36,089 12,911 356,328 15,672
C. Henry Besten, Jr. -0- -0- 23,000 8,500 156,875 7,500
Marc R. Solochek 3,000 53,500 19,250 7,750 139,125 6,000
Roy F. Layman -0- -0- 26,750 6,750 270,375 6,000
</TABLE>
16
<PAGE> 20
COMPARISON OF CUMULATIVE TOTAL RETURN
-------------------------------------
<TABLE>
<CAPTION>
Measurement Period Peer
(Fiscal Year Covered) Ashland Coal Companies S&P 500
<S> <C> <C> <C>
1989 100.00 100.00 100.00
1990 137.14 81.78 96.89
1991 211.42 131.30 126.42
1992 154.62 109.06 136.05
1993 186.72 110.31 149.76
1994 178.39 121.08 151.74
</TABLE>
Peer Companies are Addington Resources, Inc., Cyprus Amax Minerals Co., NERCO,
Inc. (through 6/2/93), Pittson Minerals Group, Westmoreland Coal Co., and
Zeigler Coal Holding Company (9/29/94). The indicated cumulative total returns
assume reinvestment of dividends. The cumulative total returns of each
component company included in the peer companies index has been weighted
according to each respective company's stock market capitalization. On June 2,
1993, NERCO, Inc. merged into a subsidiary of Kennecott Corp. and was dropped
from the peer group. On July 8, 1993, the Pittston Company ceased trading its
shares and commenced trading "target" shares of Pittston Services representing
its non-minerals businesses and Pittston Minerals representing its minerals
business. On November 30, 1993, AMAX, Inc. merged into Cyprus Minerals Company.
On September 29, 1994, Zeigler Coal Holding Company first offered its shares to
the public. The value for the peer group of 121.08 on December 31, 1994, is
based on the exclusion of NERCO, Inc. as of June 2, 1993, inclusion of the
Pittston Minerals target stock as of July 8, 1993, inclusion of the Cyprus AMAX
Minerals Company stock on November 30, 1993, and inclusion of the Zeigler
Holding Company stock as of September 29, 1995, and recapitalization of the
peer group as of each of those dates.
PENSION PLAN
The Ashland Coal, Inc. Pension Plan (Pension Plan) covers certain full-time
salaried and hourly employees, including the executives named in the Summary
Table set forth above. To the extent benefits under the qualified Pension Plan
would exceed the limits established by Section 415 of the Internal Revenue Code
of 1986, as amended, (Code), they would be payable under Ashland Coal's
Nonqualified Excess Benefit Pension Plan. Similarly, to the extent benefits
payable under the qualified Pension Plan are limited by Section 401(a)(17) of
the Code, such benefits will be provided to certain employees under Ashland
Coal's Benefits Restoration Plan. The following table shows the estimated annual
benefits payable to eligible employees under the qualified Pension Plan, the
Nonqualified Excess Benefit Plan, and the Benefits Restoration Plan using the
benefit formula for salaried employees and assuming continued employment until
the normal date of retirement at age 65.
17
<PAGE> 21
PENSION PLAN TABLE
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
YEARS OF SERVICE
-----------------------------------------------------------
REMUNERATION 15 20 25 30 35
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$100,000 $21,826 $ 29,101 $ 36,377 $ 43,652 $ 50,927
$125,000 $27,451 $ 36,601 $ 45,752 $ 54,902 $ 64,052
$150,000 $33,076 $ 44,101 $ 55,127 $ 66,152 $ 77,177
$175,000 $38,701 $ 51,601 $ 64,502 $ 77,402 $ 90,302
$200,000 $44,326 $ 59,101 $ 73,877 $ 88,652 $103,427
$225,000 $49,951 $ 66,601 $ 83,252 $ 99,902 $116,552
$250,000 $55,576 $ 74,101 $ 92,627 $111,152 $129,677
$275,000 $61,201 $ 81,601 $102,002 $122,402 $142,802
$300,000 $66,826 $ 89,101 $111,377 $133,652 $155,927
$325,000 $72,451 $ 96,601 $120,752 $144,902 $169,052
$350,000 $78,076 $104,101 $130,127 $156,152 $182,177
$375,000 $83,701 $111,601 $139,502 $167,402 $195,302
</TABLE>
Remuneration is computed only on annual salary shown in the Summary Table
and excludes all other amounts shown in that Table. The benefits set forth in
the table above assume the remuneration set forth is the remuneration during the
highest consecutive 36-month period of the final 120-month period prior to
retirement. For the purposes of computing the Annual Retirement Benefit payable
under the Pension Plan, no more than the annual compensation limit established
by the Code may be taken into account. This limit is currently $150,000.
As of December 31, 1994, Messrs. Payne, Woodring, Besten, Solochek and
Layman had credited service in the Pension Plan of 17 years, 16 years and 7
months, 21 years and 9 months, 18 years and 4 months, and 23 years and 5 months,
respectively.
The amounts in the foregoing table are shown on a straight life basis and
are not subject to any reductions for Social Security or other benefits received
by the participant. The amounts include the pre-January 1987 portion of the
benefit vested and annuitized upon termination and re-establishment of the
Pension Plan in January 1987. Under the Pension Plan, officers are entitled to
benefits on the same basis as other salaried employees. For a complete
discussion of the supplemental annual benefits payable upon retirement to
William C. Payne under his supplemental retirement benefits agreement, (SEE
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS BELOW).
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE IN CONTROL ARRANGEMENTS
EMPLOYMENT CONTRACT
In October 1990, Ashland Coal entered into a supplemental retirement
benefits agreement with Mr. Payne (Agreement) which provides for different
benefits depending upon whether Mr. Payne's service to Ashland Coal ends before,
or on or after age 62. Because Mr. Payne has now reached the age of 62, the
portion of the Agreement which addresses benefits if his service with Ashland
Coal ends before he reaches the age of 62 is no longer applicable. If Mr.
Payne's employment is terminated by Ashland Coal without cause, he resigns for
any reason following a change in control, or he retires with or without the
consent of the Board of Directors of Ashland Coal, then he would receive on an
annual basis a supplemental benefit equal to 50 percent of his average base
compensation plus average incentive compensation paid or accrued under Ashland
Coal's Incentive Compensation Plan during the highest 36 months of the final
60-month period of his employment. Benefits payable under the Agreement are
reduced by any benefits payable to Mr. Payne under Ashland Coal's Pension Plan,
any other qualified defined benefit pension plan maintained by Ashland Coal, the
Nonqualified Excess Benefit Plan, and the Benefit Restoration Plan. As a
consequence of this Agreement,
18
<PAGE> 22
Mr. Payne's benefits under the Pension Plan, the Nonqualified Excess Benefit
Pension Plan and the Benefit Restoration Plan will be supplemented by
approximately $138,000 per year, assuming (1) he retires at age 65, (2) that
half of the sum of (A) his average base compensation paid during the highest 36
months of the final 60-month period of his employment and (B) his average
incentive compensation paid during the highest 36 months of the final 60-month
period of his employment is $234,000, and (3) that his regular benefit under the
Pension Plan, the Nonqualified Excess Benefit Pension Plan and the Benefit
Restoration Plan upon retirement at age 65 would be $96,000. Benefits under the
Agreement are not prorated on years of service, and are not payable if Mr.
Payne's employment is terminated by Ashland Coal for cause.
SALARY CONTINUATION PLAN
Ashland Coal has adopted a Salary Continuation Plan pursuant to which each
regular, full-time salaried employee (including the executives named in the
Summary Table, but excluding hourly employees, employees covered by collective
bargaining, employees of entities in which Ashland Coal has a 50 percent or less
ownership interest and certain international employees of Ashland Coal and its
subsidiaries) is entitled to receive a certain lump sum payment and other
benefits in the event of a "change in control" of Ashland Coal (as defined in
this plan) and termination of a participant's employment without cause within
two years following such a change in control. Benefits under the Salary
Continuation Plan are determined according to the following schedule:
<TABLE>
<CAPTION>
LENGTH OF SERVICE PAYMENT
----------------- -------
<S> <C>
Up to 5 full years 3 months' compensation
6-10 full years 6 months' compensation
11-15 full years 1 year's compensation
16-20 full years 1 1/2 years' compensation
20+ years 2 years' compensation
</TABLE>
As of December 31, 1994, Messrs. Payne, Woodring, Besten, Solochek, and
Layman had service under the Salary Continuation Plan of 18, 17, 22, 19 and 24
years, respectively.
COMPENSATION OF DIRECTORS
Nonemployee directors of Ashland Coal during 1994 received an annual
retainer of $18,000 and a $1,000 fee for each Board and Committee meeting
attended and expenses incurred in attending all such meetings. A director who
serves as a chairman of a committee is entitled to receive an additional $2,500
fee per year for each chairmanship held by such director. In addition, directors
receive accidental death and dismemberment insurance coverage of $100,000.
Messrs. Brothers, Chellgren, Feazell, Quin, and Yancey have waived the payment
of their fees and retainers, which waiver may be withdrawn at any time. Under
the Deferred Compensation Plan for Directors' Fees, a director who is separately
compensated for his services on the Board or a committee of the Board may defer
all or part of his director's retainer, meeting fees and any per diem
compensation for special assignments. A director may elect to earn interest on
deferred amounts based on either the prime rate (as quoted by Citibank, N.A. as
its prime commercial lending rate on the last day of each calendar quarter) or
based on a hypothetical investment in Ashland Coal Common Stock. Deferred
amounts, plus earnings, are payable in cash to the director, his estate, or
beneficiary over such period of time as might be designated by the director, in
no event to extend beyond the twentieth anniversary of the termination of his
services as a director.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of either the P&C Committee or the KESA Committee are
officers or employees of Ashland Coal or any of its subsidiaries or former
officers or employees of Ashland Coal or any of its subsidiaries. Messrs.
Michael G. Ziesler, Robert A. Charpie, Robert E. Yancey, and Thomas L. Feazell
served on the P&C Committee for all of 1994. Messrs. Michael G. Ziesler, Robert
L. Hintz, and Robert A. Charpie served on the KESA Committee for all of 1994.
Mr. Ziesler is an employee of Saarbergwerke,
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<PAGE> 23
formerly the holder of Ashland Coal's Class B Preferred Stock. Messrs. Feazell
and Yancey are employees of Ashland Inc. (see Certain Relationships and Related
Transactions for further information about the relationship of Ashland Coal with
Ashland Inc. and Saarbergwerke).
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Ashland Coal receives certain services from and provides certain services
to Ashland Inc. for which fees are charged between the companies. During 1994,
Ashland Coal paid Ashland Inc. $392,000 and Ashland Inc. paid Ashland Coal
$2,000 for these services.
Ashland Coal also has purchased fuel, oil and other products from Ashland
Inc. at current market prices using standard purchase orders. Such purchases
amounted to $5,881,000 in 1994.
During 1994, Saarbergwerke paid Ashland Coal $4,124,000 for metallurgical
coal purchased from Ashland Coal.
By Coal Sales Agency Agreement dated December 12, 1991, as amended on
January 26, 1993 and as of January 1, 1995 (Agency Agreement), the Company
appointed Saarbergwerke and Carboex (collectively, Sales Agent), as its
exclusive agent for the purpose of selling high volatile coking coal and PCI
product from reserves controlled by Ashland Coal's subsidiaries for use in the
steel making process to customers within an area of responsibility comprised of
Europe, several neighboring Mediterranean countries, and the former Soviet
Union. Ashland Coal agreed to make available for sale pursuant to the Agency
Agreement a minimum of 250,000 tons of high volatile coking coal per year.
Pursuant to the Agency Agreement, the Sales Agent has certain options to request
PCI product in substitution for high volatile coking coal. The Agency Agreement
is for a term through December 31, 2000, if certain sales volumes are achieved
during the two-year period of calendar 1996 and 1997. During 1994, Ashland Coal
paid each of Saarbergwerke and Carboex $108,000 for their services as agents
under the terms of the Agency Agreement.
Management believes charges between Ashland Coal and Ashland Inc. for
services rendered or provided were reasonable, and that the other transactions
described above were concluded on terms equivalent to those prevailing among
unaffiliated parties.
Ernst & Young LLP, whose appointment as independent auditor for Ashland
Coal is sought to be ratified under Item III, is also the independent auditor
for Ashland Inc., and Ernst & Young S.A., a Spanish affiliate of Ernst & Young
LLP, is the independent auditor for Carboex.
ITEM II. APPROVAL OF THE ASHLAND COAL, INC.
1995 STOCK INCENTIVE PLAN
(PROPOSAL 2 ON FORM OF PROXY CARD)
Since going public in 1988, Ashland Coal has used its stock incentive plan
as an integral part of its compensation package to attract and retain well
qualified employees and to provide incentive to key employees to devote their
best efforts to Ashland Coal through ownership of Ashland Coal stock. Stock
options tie the interests of key employees to the interests of stockholders.
As a result of the grant of stock options under the 1988 Stock Incentive
Plan for Key Employees of Ashland Coal, Inc. and its Subsidiaries (the 1988
Plan) by the Key Employee Stock Administration Committee of Ashland Coal's Board
of Directors (KESA Committee) at its meeting on February 21, 1995, no options
remain available for grant under the 1988 Plan. The Board of Directors has
determined that a new stock incentive plan is needed in order to continue to
promote the interests of Ashland Coal and its stockholders by providing eligible
employees of Ashland Coal with an incentive to continue their service and exert
their best efforts to enhance shareholder value.
At its meeting on December 8, 1994, the Board of Directors of Ashland Coal
approved the Ashland Coal, Inc. 1995 Stock Incentive Plan (the 1995 Plan),
subject to approval by the stockholders of Ashland Coal. The Board set aside
1,000,000 shares of Ashland Coal Common Stock, par value $.01, for issuance
under the 1995 Plan. The amount of shares so set aside constitutes about 7.3
percent of the Common Stock outstanding
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<PAGE> 24
on February 28, 1995, or about 5.5 percent of outstanding shares assuming
conversion of the Class B and C Preferred Stock into Common Stock as of that
date. The closing price of a share of Common Stock on the New York Stock
Exchange on that date was $27.375. If approved by the Stockholders of Ashland
Coal, the 1995 Plan will be effective May 1, 1995.
The primary features of the 1995 Plan are summarized below. This summary is
qualified in its entirety by reference to the specific provisions of the 1995
Plan, the full text of which is set forth as Exhibit A to this Proxy Statement.
ADMINISTRATION
If approved by the stockholders of Ashland Coal, the 1995 Plan will be
administered by a committee of the Board of Directors, presently the KESA
Committee, none of whom will be eligible to participate in the 1995 Plan for at
least one year prior to his or her appointment as a member of such committee.
The KESA Committee has the exclusive authority to select the persons to be
granted awards under the 1995 Plan, to determine the type, size and terms of the
awards, to determine the time when awards will be granted, and to prescribe the
form of any agreement embodying awards made under the 1995 Plan. The 1995 Plan
limits the number of options that may be granted in any calendar year to any
individual employee to options to purchase no more than 100,000 shares of Common
Stock. The KESA Committee shall be authorized to interpret the 1995 Plan and to
establish, amend and rescind any rules and regulations relating to the 1995
Plan. Shares subject to options and related stock appreciation rights (SARs)
which lapse without having been exercised, or Performance Share awards which are
forfeited, become available for new grants under the 1995 Plan. Any Restricted
Stock which is forfeited shall not be available again for such new grants. To
the extent that SARs are exercised and the corresponding option cancelled, the
shares subject to the option will be charged against the maximum number of
shares authorized under the 1995 Plan at the time such option was granted. To
the extent a Phantom Stock award relating to the value of the underlying
hypothetical or target shares of Common Stock is forfeited, such number of
shares will be charged against the maximum number of shares authorized under the
1995 Plan.
ELIGIBILITY
Awards may be granted only to individuals who are employees of Ashland Coal
or its subsidiaries. A director of Ashland Coal who is also an employee of
Ashland Coal or its subsidiaries may be granted awards under the 1995 Plan.
Directors who are not also employees may not receive awards under the 1995 Plan.
It is not possible at this time to determine who may be selected to receive
grants of awards under the 1995 Plan or the number of awards to any individual.
Such selections and determinations will be made by the KESA Committee on the
basis of duties, responsibilities, ability to affect profitability, and present
and future contributions of individuals to the success of Ashland Coal. Awards
under the 1988 Plan were last made to 32 persons and it is anticipated that
approximately the same number of individuals will receive awards under the 1995
Plan; however, the KESA Committee may from time to time reach lower in the
organization and make awards to more people than presently have been granted
options under the 1988 Plan. Because grants of awards under the 1995 Plan are
solely at the discretion of the KESA Committee, the benefits to those executive
officers listed in the Summary Compensation Table, or any other person, cannot
be determined.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
Options may be granted by the KESA Committee as incentive stock options
(ISOs) intended to qualify for favorable tax treatment under federal tax law or
as nonqualified stock options (NQSOs). SARs may be granted with respect to any
options granted under the 1995 Plan and may be exercised only when the
underlying option is exercisable. An SAR permits the holder to surrender an
option or any portion thereof and, at the discretion of the KESA Committee,
receive in exchange shares of Common Stock, cash or a combination thereof, with
an aggregate value equal to the excess of the fair market value (determined as
of the date of exercise of the SAR) of one share of Common Stock with respect to
which such SAR has been exercised over the exercise price specified in such
option multiplied by the number of shares covered by such option or portion
thereof which is to be exercised. The 1995 Plan requires that the exercise price
of all options and SARs be equal to or greater than the fair market value of
Ashland Coal Common Stock on the date of
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<PAGE> 25
grant of that option. The term of any ISO or related SAR cannot exceed ten years
from date of grant. Employees granted options or awards under the 1995 Plan must
agree to remain in service with Ashland Coal at least one year from the date of
the grant or award.
Subject to such rules as the KESA Committee may impose, the exercise price
of an option may be paid in cash, in shares of Ashland Coal Common Stock owned
by the optionee for six months or longer, with a combination of cash and shares
or by effecting a "cashless exercise", if so approved by the KESA Committee, or
with such other consideration as shall be approved by the KESA Committee. A
"cashless exercise" is a technique which allows the optionee to exercise stock
options without cash through the assistance of a broker through either a
simultaneous exercise and sale or broker loan. The "cashless exercise" technique
does not increase the compensation that the option provides; the optionee
receives the same economic benefit as he or she would upon exercise of an SAR
issued in tandem with the option. At the KESA Committee's discretion, options
may be exercised by delivery of a note payable over not more than five years.
In the case of a "change in control" of Ashland Coal (as defined in the
1995 Plan), options granted pursuant to the 1995 Plan may become fully
exercisable as to all optioned shares from and after the date of such "change in
control" in the discretion of the KESA Committee or as may otherwise be provided
in the grantee's option agreement. Generally, death, retirement, or disability
will not result in the cancellation of options or awards. The KESA Committee
may, at its discretion, accelerate the date or dates at which options or awards
are exercisable.
RESTRICTED STOCK AND MERIT AWARDS TO EMPLOYEES
The KESA Committee may grant shares of Common Stock to 1995 Plan
participants in such amounts, and subject to such restrictions (Restricted
Stock) and additional terms and conditions, if any, as the KESA Committee in its
sole discretion shall determine, consistent with the provisions of the 1995
Plan. The KESA Committee may also grant from time to time shares of Common Stock
to selected 1995 Plan participants free of restrictions (Merit Awards) in such
amounts as the KESA Committee in its sole discretion shall determine, consistent
with the provisions of the 1995 Plan. As a condition to any award of Restricted
Stock or Merit Award, the KESA Committee may require a participant to pay an
amount equal to, or in excess of, the par value of the shares of Restricted
Stock or Common Stock awarded to him or her as a merit award.
Restricted Stock may not be sold, assigned, transferred, pledged, or
otherwise encumbered during a "Restricted Period", which in the case of grants
to employees shall not be less than one year from the date of grant. The
Restricted Period with respect to any outstanding shares of Restricted Stock
awarded to employees may be reduced by the KESA Committee at any time, but in no
event shall the Restricted Period be less than one year. Except for such
restrictions, the employee as the owner of such stock shall have all rights of a
stockholder including, but not limited to, the right to vote such stock and to
receive dividends thereon as and when paid.
In the event that an employee's employment is terminated for any reason
prior to the lapse of all restrictions thereon, an employee's Restricted Stock
will be forfeited; provided, however, that the KESA Committee may limit such
forfeiture in its sole discretion. At the end of the Restricted Period all
shares of Restricted Stock shall be transferred free and clear of all
restrictions to the employee. In the case of a "change in control" of Ashland
Coal (as defined in the 1995 Plan), an employee may receive his or her
Restricted Stock free and clear of all restrictions in the discretion of the
KESA Committee or as may otherwise be provided in the applicable Restricted
Stock award.
PERFORMANCE SHARE AWARDS
The KESA Committee may make, in its sole discretion and subject to such
terms and conditions as it may determine in accordance with the 1995 Plan,
awards of Common Stock which shall be earned on the basis of Ashland Coal's
performance in relation to established performance measures for a specific
performance period (Performance Shares). Such measures may include, but shall
not be limited to, return on investment, earnings per share, return on
stockholders' equity, or return to stockholders. Performance Shares may not be
sold, assigned, transferred, pledged, or otherwise encumbered during the
relevant performance period.
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<PAGE> 26
Performance Shares may be paid in cash, shares of Common Stock or shares of
Restricted Stock in such proportions as the KESA Committee may determine. An
employee must be employed at the end of the performance period to receive
payment of Performance Shares; provided, however, in the event that an
employee's employment is terminated by reason of death, disability, retirement,
or other reason approved by the KESA Committee, the KESA Committee may limit
such forfeiture in its sole discretion. In the case of a "change in control" of
Ashland Coal (as defined in the 1995 Plan), an employee may receive his or her
Performance Shares in the discretion of the KESA Committee or as may otherwise
be provided in the applicable Performance Share award.
"PHANTOM STOCK" AWARDS
The KESA Committee also may make, in its sole discretion, and subject to
such terms and conditions as it may determine in accordance with the 1995 Plan,
Phantom Stock awards. Such awards may be based solely on the value of the
underlying target or hypothetical shares, solely on any earnings or appreciation
thereon, or both and may be subject to such service-based vesting or performance
measures as may be established by the KESA Committee. Such measures may include,
but shall not be limited to, years of service, periods of employment, the
occurrence of certain events, and individual or corporate performance objectives
including, but not limited to, return on investment, earnings per share, return
on stockholders' equity, or return to stockholders.
Phantom Stock awards may be paid in cash or shares of Common Stock in such
proportions as the KESA Committee may determine. Generally, Phantom Stock awards
that have not vested or have not been earned prior to an employee's separation
from service will be forfeited. The KESA Committee may, however, in its sole
discretion limit such forfeitures. In the case of a "change in control" of
Ashland Coal (as defined in the 1995 Plan), an employee may receive his or her
Phantom Stock award in the discretion of the KESA Committee or as may otherwise
be provided in the employee's Phantom Stock award. Any Phantom Stock award
forfeited by an employee (relating to the value of the underlying hypothetical
or target shares of Common Stock) shall not again be available for the grant of
awards under the 1995 Plan.
AWARD DEFERRALS
The KESA Committee may offer employees the opportunity to defer the receipt
of payments of Restricted Stock awards, Performance Share awards, or Phantom
Stock awards, and cash or Common Stock may be granted as a bonus for deferral in
accordance with the 1995 Plan under such terms as may be established by the KESA
Committee. The limit on such bonuses is 20 percent of the applicable award so
deferred.
PLAN AMENDMENT
The Board of Directors shall have the authority to amend the 1995 Plan as
it deems advisable; however, no such amendment shall, without authorization and
approval of stockholders: (i) increase the aggregate number of shares available
for the granting of awards under the 1995 Plan, or the maximum number of options
which may be awarded in any calendar year to any individual employee except in
the event of certain changes in capitalization, such as a stock split, stock
dividend, recapitalization, reorganization, merger, consolidation, combination
or exchange of shares, split-up, split-off, spin-off, liquidation or other
similar corporate change; (ii) change the class of persons eligible to receive
options or awards under the 1995 Plan; (iii) change the manner of determining
the minimum exercise price of options other than to change the manner of
determining fair market value of the Common Stock; or (iv) extend the period
during which awards may be granted or exercised.
FEDERAL INCOME TAX CONSEQUENCES
The following brief description of the tax consequences of awards under the
1995 Plan is based on federal tax laws currently in effect and does not purport
to be a complete description of such federal tax consequences.
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<PAGE> 27
Options
There are no federal tax consequences either to the optionee or to Ashland
Coal upon the grant of an ISO or a NQSO. On the exercise of an ISO, the optionee
will not recognize any income and Ashland Coal will not be entitled to a
deduction, although such exercise may give rise to alternative minimum tax
liability for the optionee. Generally, if the optionee disposes of shares
acquired upon exercise of an ISO within two years of the date of grant or one
year of the date of exercise, the optionee will recognize ordinary income, and
Ashland Coal will be entitled to a deduction, equal to the excess of the fair
market value of the shares on the date of exercise over the option price
(limited generally to the gain on the sale). Ashland Inc. will recognize such
deduction as a consequence of the consolidation of Ashland Coal with Ashland
Inc. for accounting purposes. The balance of any gain or loss will be treated as
a capital gain or loss to the optionee. If the shares are disposed of after the
foregoing holding requirements are met, Ashland Coal will not be entitled to any
deduction, and the entire gain or loss for the optionee will be treated as a
capital gain or loss.
On exercise of a NQSO, the date-of-exercise fair market value of the shares
acquired in excess of the option price will generally be taxable to the optionee
as ordinary income and deductible by Ashland Coal. The disposition of shares
acquired upon exercise of a NQSO will generally result in a capital gain or loss
for the optionee, but will have no tax consequences for Ashland Coal.
Stock Appreciation Rights
The amount of any cash (or the fair market value of any Common Stock)
received by the holder of an option upon the exercise of SARs under the 1995
Plan will be subject to ordinary income tax in the year of receipt, and Ashland
Coal will be entitled to a deduction for such amount.
The affirmative vote of the holders of a majority of the outstanding shares
of capital stock of Ashland Coal, present or represented at the meeting and
entitled to vote, and voting together as one class is required for approval of
Proposal 2. Broker non-votes will not be counted as present or represented and
entitled to vote, or as votes cast either for or against the proposal.
Abstentions will be counted as present and represented and entitled to vote, and
therefore are in effect votes against the adoption of this proposal, because the
affirmative vote of a majority of the shares of capital stock entitled to vote
and present in person or by proxy at the meeting is required for the adoption of
this proposal.
FOR THE REASONS STATED HEREIN, THE BOARD OF DIRECTORS RECOMMENDS THAT THE
STOCKHOLDERS VOTE FOR THIS PROPOSAL.
ITEM III. RATIFICATION OF AUDITORS
(PROPOSAL 3 ON FORM OF PROXY CARD)
The Audit Committee of the Board of Directors recommended and, subject to
stockholder ratification, the Board has appointed Ernst & Young LLP to audit the
accounts of Ashland Coal and its subsidiaries for the year ending December 31,
1995. Ernst & Young LLP has audited the accounts of Ashland Coal and its
subsidiaries for at least the last five years. Ernst & Young LLP is also the
independent auditor for Ashland Inc., and Ernst & Young S.A., a Spanish
affiliate of Ernst & Young LLP, is the independent auditor for Carboex.
Submission of the appointment to the stockholders for their ratification is not
required. However, the Board will reconsider the appointment if it is not
ratified by the stockholders. The holders of outstanding shares of Preferred
Stock and Common Stock will vote together as one class with respect to this
Proposal 3.
The following resolution concerning the appointment of independent auditors
will be offered at the meeting:
"RESOLVED, that the appointment of Ernst & Young LLP by the Board
of Directors of the Corporation to audit the accounts of the
Corporation and its subsidiaries for the year ending December 31,
1995, is hereby ratified."
Representatives of Ernst & Young LLP will be present at the Annual Meeting
and will have the opportunity to make a statement and to respond to appropriate
questions.
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MISCELLANEOUS
The expenses of solicitation of proxies for the Annual Meeting, including
the cost of preparing and mailing this Proxy Statement and the accompanying
material, will be paid by Ashland Coal. Such expenses may also include the
charges and expenses of banks, brokerage houses and other custodians, nominees,
or fiduciaries for forwarding proxies and proxy material to beneficial owners of
shares. Solicitation may be made by mail, telephone, telegraph, and personal
interview, and by regularly engaged officers and employees of Ashland Coal, who
will not be additionally compensated therefor.
The Board of Directors knows of no other matters to be voted upon at the
Annual Meeting. If any other matters properly come before the Annual Meeting, it
is the intention of the persons named in the enclosed form of proxy to vote on
such matters in accordance with their judgment.
Any stockholder who executes a form of proxy may revoke it by giving
written notice to the Secretary of Ashland Coal, or by giving to the Secretary
of the meeting a duly executed form of proxy bearing a date later than the form
of proxy being revoked, at any time before such proxy is voted. Attendance at
the meeting shall not have the effect of revoking a proxy unless the stockholder
so attending shall, in writing, so notify the Secretary of the meeting prior to
the voting of the proxy.
A form of proxy which is properly signed, dated and not revoked will be
voted in accordance with the instructions contained therein. IF NO INSTRUCTIONS
ARE GIVEN, THE PERSONS NAMED IN THE FORM OF PROXY SOLICITED BY THE BOARD OF
DIRECTORS INTEND TO VOTE FOR THE NOMINEES NAMED THEREIN FOR ELECTION AS
DIRECTORS; FOR THE APPROVAL OF THE 1995 STOCK INCENTIVE PLAN; AND FOR THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS FOR
1995.
Any stockholder may strike out the names of the proxies designated by the
Board of Directors on the form of proxy card and may write in and substitute the
name of any other person as proxy and may deliver the revised form of proxy card
to such other person whom the stockholder may wish to designate as proxy for the
purpose of representing such stockholder at the meeting.
Stockholder Proposals: Proposals which are the proper subject for
inclusion in the Proxy Statement and for consideration at the 1996 Annual
Meeting of Stockholders must be received by Ashland Coal no later than November
21, 1995, in order to be included in Ashland Coal's Proxy Statement and form of
proxy card.
Please fill in, sign and date the enclosed form of proxy and return it in
the accompanying addressed envelope which requires no further postage if mailed
in the United States. If you attend the Annual Meeting and wish to vote your
shares in person, you may do so if you notify the Secretary of the meeting in
writing prior to the voting of the proxy. Your cooperation in giving this matter
your prompt attention will be appreciated.
ROY F. LAYMAN
Administrative Vice President
and Secretary
Huntington, West Virginia
March 28, 1995
25
<PAGE> 29
EXHIBIT A
ASHLAND COAL, INC.
1995 STOCK INCENTIVE PLAN
EFFECTIVE MAY 1, 1995
<PAGE> 30
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
------- ----
<S> <C> <C> <C>
ARTICLE I PURPOSE........................................................ A-1
ARTICLE II DEFINITIONS.................................................... A-1
2.01. Agreement...................................................... A-1
2.02. Ashland........................................................ A-1
2.03. Award.......................................................... A-1
2.04. Beneficiary.................................................... A-1
2.05. Board.......................................................... A-1
2.06. Change in Control.............................................. A-1
2.07. Code........................................................... A-1
2.08. Committee...................................................... A-1
2.09. Common Stock................................................... A-2
2.10. Company........................................................ A-2
2.11. Disinterested.................................................. A-2
2.12. Employee....................................................... A-2
2.13. Exchange Act................................................... A-2
2.14. Exercise Price................................................. A-2
2.15. Fair Market Value.............................................. A-2
2.16. Incentive Stock Option or ISO.................................. A-2
2.17. Merit Award.................................................... A-2
2.18. Nonqualified Stock Option or NQSO.............................. A-2
2.19. Option......................................................... A-2
2.20. Performance Period............................................. A-2
2.21. Performance Share Award........................................ A-2
2.22. Performance Shares............................................. A-2
2.23. Personal Representative........................................ A-2
2.24. Phantom Stock Award............................................ A-2
2.25. Plan........................................................... A-2
2.26. Restricted Period.............................................. A-2
2.27. Restricted Stock............................................... A-2
2.28. Restricted Stock Award......................................... A-3
2.29. Retained Distributions......................................... A-3
2.30. Retirement..................................................... A-3
2.31. Section 16(b) Optionee......................................... A-3
2.32. Stock Appreciation Right or SAR................................ A-3
2.33. Subsidiary..................................................... A-3
2.34. Tax Date....................................................... A-3
ARTICLE III STOCK SUBJECT TO THE PLAN...................................... A-3
ARTICLE IV ADMINISTRATION................................................. A-3
ARTICLE V ELIGIBILITY.................................................... A-4
ARTICLE VI STOCK OPTIONS.................................................. A-4
6.01. Designation and Price.......................................... A-4
6.02. Exercise....................................................... A-4
6.03. Payment for Shares............................................. A-5
ARTICLE VII STOCK APPRECIATION RIGHTS...................................... A-5
ARTICLE VIII RESTRICTED STOCK AWARDS........................................ A-6
ARTICLE IX MERIT AWARDS................................................... A-7
ARTICLE X PERFORMANCE SHARES............................................. A-7
ARTICLE XI PHANTOM STOCK AWARDS........................................... A-7
</TABLE>
i
<PAGE> 31
<TABLE>
<CAPTION>
SECTION PAGE
------- ----
<S> <C> <C> <C>
ARTICLE XII SPECIAL EXERCISE RULES AND CONTINUED EMPLOYMENT AND AGREEMENT
TO SERVE....................................................... A-8
12.01. Death.......................................................... A-8
12.02. Disability..................................................... A-8
12.03. Other Separations From Service................................. A-8
12.04. Certain Accelerations.......................................... A-9
12.05. Continued Employment Undertaking............................... A-9
12.06. Leaves of Absence.............................................. A-9
ARTICLE XIII WITHHOLDING TAXES.............................................. A-9
ARTICLE XIV ADJUSTMENTS UPON CHANGES IN CAPITALIZATION..................... A-10
ARTICLE XV AMENDMENTS AND TERMINATIONS.................................... A-10
ARTICLE XVI MISCELLANEOUS PROVISIONS....................................... A-10
16.01. No Right to Award.............................................. A-10
16.02. Assignment or Alienation....................................... A-10
16.03. Compliance with Securities Laws................................ A-10
16.04. Expenses....................................................... A-11
16.05. Consent to, Ratification of Certain Actions.................... A-11
16.06. Binding Nature of Actions...................................... A-11
16.07. Other Compensation Arrangements................................ A-11
16.08. Time Awards Granted............................................ A-11
ARTICLE XVII EFFECTIVENESS OF THE PLAN...................................... A-11
ARTICLE XVIII GOVERNING LAW.................................................. A-11
ARTICLE XIX UNFUNDED PLAN.................................................. A-12
ARTICLE XX RULES OF CONSTRUCTION.......................................... A-12
</TABLE>
ii
<PAGE> 32
ASHLAND COAL, INC.
1995 STOCK INCENTIVE PLAN
ARTICLE I
PURPOSE
The purpose of the Ashland Coal, Inc. 1995 Stock Incentive Plan is to
promote the interests of Ashland Coal, Inc. and its shareholders by providing
the officers and employees of the Company and its Subsidiaries with an incentive
to continue service with Ashland. Accordingly, the Company may grant to selected
officers and employees of Ashland Stock Options (both options qualifying under
Code section 422 and options not so qualifying), Stock Appreciation Rights,
Restricted Stock, Merit Awards, Performance Share Awards and Phantom Stock
Awards in an effort to attract and retain in Ashland's employ qualified
individuals and to provide such individuals with incentives to devote their best
efforts to Ashland through ownership of the Company's stock, thus enhancing the
value of the Company for the benefit of shareholders. The proceeds received by
the Company from the exercise of options granted pursuant to this Plan shall be
used for general corporate purposes.
ARTICLE II
DEFINITIONS
2.01. AGREEMENT means a written agreement (including any amendment or
supplement thereto) between the Company and an Employee specifying the terms and
conditions of an Award.
2.02. ASHLAND means, collectively, Ashland Coal, Inc. and its Subsidiaries.
2.03. AWARD means an Option, a Stock Appreciation Right, a Restricted Stock
Award, a Merit Award, a Performance Share Award, or a Phantom Stock Award, in
each case granted under this Plan.
2.04. BENEFICIARY means the person, persons, trust or trusts designated by an
Employee, or if no designation has been made, the person, persons, trust, or
trusts entitled by will or the laws of descent and distribution to receive the
benefits specified under this Plan in the event of an Employee's death.
2.05. BOARD means the Board of Directors of the Company.
2.06. CHANGE IN CONTROL means an event or circumstance which shall be deemed to
occur (1) upon the approval by the Board (or if approval of the Board is not
required as a matter of law, the shareholders of the Company) of (A) any
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of Common Stock
would be converted into cash, securities or other property other than a merger
in which the holders of Common Stock immediately prior to the merger will have
the same proportionate ownership of Common Stock of the surviving corporation
immediately after the merger, (B) any sale, lease, exchange, or other transfer
(in one transaction or a series of related transactions) of all or substantially
all the assets of the Company, or (C) adoption of any plan or proposal for the
liquidation or dissolution of the Company, (2) when any "person" (as defined in
Section 13(d) of the Exchange Act), other than the Company or any subsidiary or
employee benefit plan or trust maintained by the Company, shall become the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of more than 20% of the Company's Common Stock outstanding at the
time, without the prior approval of the Board, or (3) at any time during a
period of two consecutive years, individuals who at the beginning of such period
constituted the Board shall cease for any reason to constitute at least a
majority thereof, unless the election or the nomination for election by the
Company's shareholders of each new director during such two-year period was
approved by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of such two-year period.
2.07. CODE means the Internal Revenue Code of 1986, as amended from time to
time.
2.08. COMMITTEE means the Key Employee Stock Administration or "KESA" Committee
of the Board, as from time to time constituted, or any successor committee of
the Board with similar functions, which shall consist of three or more members,
each of whom shall be Disinterested.
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2.09. COMMON STOCK means the Common Stock of the Company ($.01 par value),
subject to adjustment pursuant to Article 14.
2.10. COMPANY means Ashland Coal, Inc.
2.11. DISINTERESTED means disinterested within the meaning of applicable
regulatory requirements, including those promulgated under Section 16 of the
Exchange Act.
2.12. EMPLOYEE means an officer or employee of Ashland.
2.13. EXCHANGE ACT means the Securities Exchange Act of 1934, as amended.
2.14. EXERCISE PRICE means, with respect to each share of Common Stock subject
to an Option, the price fixed by the Committee at which such share may be
purchased from the Company pursuant to the exercise of such Option, which price
at no time may be less than 100% of the Fair Market Value of the Common Stock on
the date the Option is granted.
2.15. FAIR MARKET VALUE means, on any given date, the closing price of a share
of Common Stock as reported on the New York Stock Exchange composite tape on
such day, or, if the Common Stock was not traded on the New York Stock Exchange
on such day, then on the next preceding day that the Common Stock was traded on
such exchange, all as reported by such service as the Committee may select. If
shares of Common Stock are not then traded on the New York Stock Exchange, the
Fair Market Value shall be determined by the Committee using any reasonable
method in good faith.
2.16. INCENTIVE STOCK OPTION or ISO means an Option that is intended by the
Committee to meet the requirements of Section 422 of the Code or any successor
provision. No Option that is intended to be an Incentive Stock Option shall be
invalid for failure to qualify as an Incentive Stock Option.
2.17. MERIT AWARD means an award of Common Stock issued pursuant to Article IX
of the Plan.
2.18. NONQUALIFIED STOCK OPTION or NQSO means an Option granted pursuant to
this Plan which does not qualify as an Incentive Stock Option.
2.19. OPTION means the right to purchase Common Stock at a price to be
specified and upon terms to be designated by the Committee or otherwise
determined pursuant to this Plan. An Option shall be designated by the Committee
as a Nonqualified Stock Option or an Incentive Stock Option.
2.20. PERFORMANCE PERIOD means the period designated by the Committee during
which the performance objectives shall be measured.
2.21. PERFORMANCE SHARE AWARD means an award of shares of Common Stock, the
issuance of which is contingent upon attainment of performance objectives
specified by the Committee.
2.22. PERFORMANCE SHARES means those shares of Common Stock issuable pursuant
to a Performance Share Award.
2.23. PERSONAL REPRESENTATIVE means the person or persons who, upon the
disability or incompetence of an Employee, shall have acquired on behalf of the
Employee by legal proceeding or otherwise the right to receive the benefits
specified in this Plan.
2.24. PHANTOM STOCK AWARD means a hypothetical or target award of a number of
shares of Common Stock, the vesting, earnout or payment of which is contingent
upon the completion of a number of years of service, the occurrence of an event
or the attainment of performance objectives established by the Committee.
2.25. PLAN means this Ashland Coal, Inc. 1995 Stock Incentive Plan.
2.26. RESTRICTED PERIOD means the period designated by the Committee during
which Restricted Stock may not be sold, assigned, transferred, pledged, or
otherwise encumbered, which period shall not be less than one year from the date
of grant.
2.27. RESTRICTED STOCK means those shares of Common Stock issued pursuant to a
Restricted Stock Award which are subject to the restrictions, terms, and
conditions set forth in the related Agreement.
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2.28. RESTRICTED STOCK AWARD means an award of Restricted Stock.
2.29. RETAINED DISTRIBUTIONS means any securities or other property (other than
cash dividends) distributed by the Company in respect of Restricted Stock during
any Restricted Period.
2.30. RETIREMENT means retirement of an Employee from the employ of Ashland as
described in a tax-qualified pension or profit sharing plan maintained by
Ashland in which the Employee participates.
2.31. SECTION 16(B) OPTIONEE means an Employee or former Employee who is
subject to Section 16(b) of the Exchange Act.
2.32. STOCK APPRECIATION RIGHT or SAR means the right of the holder to
surrender an Option or any portion thereof which is then exercisable and/or
receive in exchange therefor shares of Common Stock, cash, or a combination
thereof, as the case may be, with an aggregate value equal to the excess of the
Fair Market Value of one share of Common Stock over the Exercise Price specified
in such Option or SAR multiplied by the number of shares of Common Stock covered
by such Option or SAR or portion thereof which is so surrendered. An SAR shall
be exercisable upon any additional terms and conditions (including, without
limitation, the issuance of Restricted Stock and the imposition of restrictions
upon the timing of exercise) which may be determined as provided in the Plan.
2.33. SUBSIDIARY means any present or future subsidiary corporation, as defined
in Section 424 of the Code, of the Company.
2.34. TAX DATE means the date the withholding tax obligation arises with
respect to the exercise of an Award.
ARTICLE III
STOCK SUBJECT TO THE PLAN
There will be reserved for issuance under the Plan (upon the exercise of
Options and Stock Appreciation Rights, upon awards of Restricted Stock,
Performance Shares, Merit Awards and Phantom Stock Awards (where such Awards
include the value of the hypothetical or target number of shares of Common
Stock) and for stock bonuses on deferred awards of Restricted Stock, Performance
Shares and Phantom Stock Awards (where such Awards include the value of the
hypothetical or target number of shares of Common Stock)), an aggregate of
1,000,000 shares of Common Stock. Such shares shall be authorized but unissued
shares of Common Stock. Except as provided in Articles VII, VIII, and XI, if any
Award under the Plan shall expire or terminate for any reason without having
been exercised in full, or if any Award shall be forfeited, the shares subject
to the unexercised, terminated or forfeited portion of such Award shall again be
available for the purposes of this Plan.
ARTICLE IV
ADMINISTRATION
This Plan shall be administered by the Committee. No person who is (or,
within one year prior to his or her appointment as a member of the Committee,
was) eligible to participate in this Plan, or in any stock option or stock bonus
plan of the Company, or any person who is not Disinterested, shall be a member
of the Committee.
In addition to any implied powers and duties that may be needed to carry
out the provisions of the Plan, the Committee shall have all the powers vested
in it by the terms of the Plan, including, without limitation, exclusive
authority to select the Employees to be granted Awards under the Plan, to
determine the type, size and terms (not inconsistent with the provisions of this
Plan) of the Awards to be made to each Employee selected, to determine the time
when Awards will be granted, and to prescribe the form of the Agreements
embodying Awards made under the Plan. No employee may be granted Options for
more than 100,000 shares of Common Stock during any calendar year. The terms of
any Award may include conditions (in addition to those in this Plan) on the
exercisability of all or any part of an Option or on the transferability or
forfeitability of Restricted Stock or a Phantom Stock Award. Notwithstanding any
such conditions, the Committee may, in
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its discretion, accelerate the time at which any Option may be exercised or the
time at which Restricted Stock or a Phantom Stock Award may become transferable
or nonforfeitable.
The Committee shall be authorized to interpret the Plan and the Awards
granted under the Plan, to establish, amend and rescind any rules and
regulations relating to the Plan, to make any other determinations which it
believes necessary or advisable for the administration of the Plan, and to
correct any defect or supply any omission or reconcile any inconsistency in the
Plan or in any Award in the manner and to the extent the Committee deems
desirable to carry it into effect. Any decision of the Committee in the
administration of the Plan, as described herein, shall be final and conclusive.
The express grant in the Plan of any specific power to the Committee shall not
be construed as limiting any power or authority of the Committee.
The Committee may act only by a majority of its members. Any determination
of the Committee may be made, without notice, by the written consent of the
majority of the members of the Committee. In addition, the Committee may
authorize any one or more of their number or any officer of the Company to
execute and deliver documents on behalf of the Committee. No member of the
Committee shall be liable for any action taken or omitted to be taken by him or
her or by any other member of the Committee in connection with the Plan, except
for his or her own willful misconduct or as expressly provided by statute.
ARTICLE V
ELIGIBILITY
Awards may be granted only to individuals who are employees of the Company
or its Subsidiaries. A director of the Company or a Subsidiary who is an
employee of the Company or a Subsidiary may be granted Awards under this Plan. A
member of the Committee may not participate in this Plan or be eligible for
Awards hereunder during the time that his or her participation would prevent the
Committee from being Disinterested.
ARTICLE VI
STOCK OPTIONS
6.01. DESIGNATION AND PRICE
(a) Any Option granted under the Plan may be granted as an Incentive Stock
Option or as a Nonqualified Stock Option as shall be designated by the Committee
at the time of the grant of such Option. Each Option shall be evidenced by an
Agreement between the recipient and the Company, which Agreement shall specify
the designation of the Option as an ISO or a NQSO, as the case may be, and shall
contain such terms and conditions as the Committee, in its sole discretion, may
determine in accordance with the Plan.
(b) Every Incentive Stock Option shall provide for a fixed expiration date
of not later than ten years from the date such Incentive Stock Option is
granted.
(c) The Exercise Price of Common Stock issued pursuant to each Option shall
be fixed by the Committee at the time of the granting of the Option; provided,
however, that such Exercise Price shall in no event be less than 100% of the
Fair Market Value of the Common Stock on the date such Option is granted.
(d) An option may be granted with or without a related SAR.
6.02. EXERCISE
The Committee may, in its discretion, provide for Options granted under the
Plan to be exercisable in whole or in part; provided, however, that no Option
may be exercised at any time for fewer than 50 shares (or the total remaining
shares covered by the Option if fewer than 50 shares) during the term of the
Option. The specified number of shares will be issued upon receipt by the
Company of (i) notice from the Optionee of exercise of an Option, and (ii)
either payment to the Company (as provided in this Article VI, Section 6.03
below), of the Exercise Price for the number of shares with respect to which the
Option is exercised, or with approval of the Committee, a secured promissory
note as hereinafter provided. Each such notice and payment
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shall be delivered or mailed by post-paid mail, addressed to Ashland Coal, Inc.,
2205 Fifth Street Road, Huntington, West Virginia 25701, Attn: Vice
President--Human Resources, or such other place or to the attention of such
other person as the Company may designate from time to time. Separate stock
certificates shall be issued by the Company for those shares acquired pursuant
to the exercise of an ISO and for those shares acquired pursuant to a NQSO.
6.03. PAYMENT FOR SHARES
Except as otherwise provided in this Article VI, the Exercise Price for the
Common Stock shall be paid in full when the Option is exercised. Subject to such
rules as the Committee may impose, the Exercise Price may be paid in whole or in
part in (i) cash, (ii) whole shares of Common Stock owned by the Employee six
months or longer and evidenced by negotiable certificates, valued at their Fair
Market Value on the date of exercise, (iii) by a combination of such methods of
payment, or (iv) such other consideration as shall constitute lawful
consideration for the issuance of Common Stock and be approved by the Committee
(including without limitation, assurance satisfactory to the Committee from a
broker registered under the Exchange Act, of the delivery of the proceeds of an
imminent sale of the stock to be issued pursuant to the exercise of such Option,
such sale to be made at the direction of the Employee). If certificates
representing shares of Common Stock are used to pay all or part of the Exercise
Price of an Option, separate certificates shall be delivered by the Company
representing the same number of shares as each certificate so used and an
additional certificate shall be delivered representing any additional shares to
which the Employee is entitled as a result of exercise of the Option. The
Committee may, in its discretion, authorize payment of all or any part of the
Exercise Price over a period of not more than five years from the date the
Option is exercised. In such instance any unpaid balance of the Exercise Price
shall be evidenced by the Employee's promissory note payable to the order of the
Company which shall be secured by such collateral and shall bear interest at
such rate or rates as determined from time to time by the Committee.
ARTICLE VII
STOCK APPRECIATION RIGHTS
The Committee may grant Stock Appreciation Rights pursuant to the
provisions of this Article VII to any Employee. Subject to the terms and
provisions of this Article VII, an SAR shall be exercisable only when the Fair
Market Value (determined as of the date of exercise of the SAR) of each share of
Common Stock with respect to which the SAR is to be exercised shall exceed the
Exercise Price per share of Common Stock subject to the SAR. An SAR granted
under the Plan shall be exercisable in whole or in part by notice to the
Company. Such notice shall state that the holder of the SAR elects to exercise
the SAR and the number of shares in respect of which the SAR is being exercised.
For purposes of this Article VII, the date of exercise of an SAR shall mean the
date on which the Company receives such notice.
Subject to the terms and provisions of this Article VII, upon the exercise
of an SAR, the holder thereof shall be entitled to receive from Ashland
consideration (in the form hereinafter provided) equal in value to the excess of
the Fair Market Value (determined as of the date of exercise of the SAR) of each
share of Common Stock with respect to which such SAR has been exercised over the
Exercise Price per share of Common Stock subject to the SAR. The Committee may
stipulate in the Agreement the form of consideration which shall be received
upon the exercise of an SAR. If no consideration is specified therein, upon the
exercise of an SAR, the holder may specify the form of consideration to be
received by such holder, which shall be in shares of Common Stock (valued at
Fair Market Value on the date of exercise of the SAR), or in cash, or partly in
cash and partly in shares of Common Stock, as the holder shall request;
provided, however, that the Committee, in its sole discretion, may disapprove
the form of consideration requested and instead authorize the payment of such
consideration in shares of Common Stock (valued as aforesaid), or in cash, or
partly in cash and partly in shares of Common Stock.
Upon the exercise of an SAR, an Option for the number of shares of Common
Stock with respect to which such SAR is exercised shall be deemed to have been
exercised and to that extent a corresponding number of shares of Common Stock
shall not again be available for the grant of Awards under the Plan. Upon the
exercise or termination of an SAR, the number of shares with respect thereto
shall be considered to have
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been exercised or terminated to the extent of the number of shares of Common
Stock with respect to which the SAR was so exercised or terminated.
ARTICLE VIII
RESTRICTED STOCK AWARDS
The Committee may make awards of Restricted Stock, evidenced by an
Agreement which shall contain such terms and conditions as the Committee, in its
sole discretion, may determine. The amount of each Restricted Stock Award and
the respective terms and conditions of each Award (which terms and conditions
need not be the same in each case) shall be determined by the Committee in its
sole discretion. The consideration to be paid by an Employee for any Award made
hereunder shall be fixed by the Committee from time to time, but shall in no
event be less than the par value of the shares of Restricted Stock awarded to
him or her determined in a manner and on a basis consistent with Delaware
General Corporation Law. Any such Restricted Stock Award shall automatically
expire if not purchased in accordance with the Committee's requirements within
thirty (30) days after the date of grant. Subject to the terms and conditions of
each Restricted Stock Award, the Employee, as the owner of the Common Stock
issued as Restricted Stock, shall have all rights of a shareholder including,
but not limited to, voting rights as to such Common Stock and the right to
receive dividends thereon when, as and if paid.
In the event that a Restricted Stock Award has been made to an Employee
whose employment or service is subsequently terminated for any reason prior to
the lapse of all restrictions thereon, such Restricted Stock will be forfeited
in its entirety by such Employee; provided, however, that the Committee may, in
its sole discretion, limit such forfeiture. Any Restricted Stock so forfeited by
an Employee shall not again be available for the grant of Awards under the Plan.
Employees may be offered the opportunity to defer the receipt of payment of
vested shares of Restricted Stock, and Common Stock may be granted as a bonus
for deferral, under terms as may be established by the Committee from time to
time; however, in no event shall the Common Stock granted as a bonus for
deferral exceed 20% of the Restricted Stock so deferred.
Restricted Stock may not be sold, assigned, transferred, pledged, or
otherwise encumbered during a Restricted Period, which shall be determined by
the Committee and which shall not be less than one year from the date such
Restricted Stock was awarded. The Committee may at any time reduce the
Restricted Period with respect to any outstanding shares of Restricted Stock
awarded under the Plan to Employees, but in no event shall such Restricted
Period be less than one year.
During the Restricted Period, certificates representing the Restricted
Stock and any Retained Distributions shall be registered in the recipient's name
and bear a restrictive legend to the effect that ownership of such Restricted
Stock (and any such Retained Distributions), and the enjoyment of all rights
appurtenant thereto are subject to the restrictions, terms, and conditions
provided in this Plan and the applicable Agreement. Such certificates shall be
deposited by the recipient with the Company, together with stock powers or other
instruments of assignment, each endorsed in blank, which will permit transfer to
the Company of all or any portion of the Restricted Stock and any securities
constituting Retained Distributions which shall be forfeited in accordance with
the Plan and the applicable Agreement. Restricted Stock shall constitute issued
and outstanding shares of Common Stock for all corporate purposes. The recipient
will have the right to vote such Restricted Stock, to receive and retain all
cash dividends, and to exercise all other rights, powers and privileges of a
holder of Common Stock with respect to such Restricted Stock, with the exception
that (i) the recipient will not be entitled to delivery of the stock certificate
or certificates representing such Restricted Stock until the restrictions
applicable thereto shall have expired; (ii) the Company will retain custody of
all Retained Distributions made or declared with respect to the Restricted Stock
(and such Retained Distributions will be subject to the same restrictions, terms
and conditions as are applicable to the Restricted Stock) until such time, if
ever, as the Restricted Stock with respect to which such Retained Distributions
shall have been made, paid, or declared shall have become vested, and such
Retained Distributions shall not bear interest or be segregated in separate
accounts; (iii) the recipient may not sell, assign, transfer, pledge, exchange,
encumber, or dispose of the Restricted Stock or any Retained Distributions
during the Restricted Period; and
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(iv) a breach of any restrictions, terms, or conditions provided in the Plan or
established by the Committee with respect to any Restricted Stock or Retained
Distributions will cause a forfeiture of such Restricted Stock and any Retained
Distributions with respect thereto.
ARTICLE IX
MERIT AWARDS
The Committee may from time to time make an award of Common Stock under the
Plan to selected Employees for such reasons and in such amounts as the
Committee, in its sole discretion, may determine. The consideration to be paid
by an Employee for any such Merit Award made hereunder shall be fixed by the
Committee from time to time, but shall in no event be less than the par value of
the shares of Common Stock awarded to him or her determined in a manner and on a
basis consistent with Delaware General Corporation Law.
ARTICLE X
PERFORMANCE SHARES
The Committee may make awards of Common Stock, evidenced by an Agreement,
to selected Employees on the basis of the Company's financial performance in any
given period. Subject to the provisions of the Plan, the Committee shall have
sole and complete authority to determine the Employees who shall receive such
Performance Shares, to determine the number of such shares to be granted for
each Performance Period, and to determine the duration of each such Performance
Period. There may be more than one Performance Period in existence at any one
time, and the duration of Performance Periods may differ from each other.
The Committee shall establish performance measures for each Performance
Period on the basis of such criteria and to accomplish such objectives as the
Committee may from time to time, in its sole discretion, determine. Such
measures may include, but shall not be limited to, return on investment,
earnings per share, return on shareholders' equity, or return to shareholders.
The performance measures determined by the Committee shall be established prior
to the beginning of each Performance Period but may be subject to such later
revisions as the Committee shall deem appropriate. Performance Shares may not be
sold, assigned, transferred, pledged, or otherwise encumbered, except as herein
provided and as provided in Section 12.04 of Article XII, during the Performance
Period.
The Committee shall determine, in its sole discretion, the manner of
payment, which may include (i) cash, (ii) shares of Common Stock, or (iii)
shares of Restricted Stock in such proportions as the Committee shall determine.
Employees may be offered the opportunity to defer the receipt of payment of
earned Performance Shares, and Common Stock may be granted as a bonus for
deferral under terms as may be established by the Committee from time to time;
however, in no event shall the Common Stock granted as a bonus for deferral
exceed 20% of the Performance Shares so deferred.
An Employee must be employed by the Company at the end of a Performance
Period in order to be entitled to payment of Performance Shares in respect of
such period; provided, however, that in the event of an Employee's cessation of
employment before the end of such period, or upon the occurrence of his or her
death, retirement, or disability, or other reason approved by the Committee, the
Committee may, in its sole discretion, limit such forfeiture. The preceding
sentence shall not affect an Employee's right to receive payment of Performance
Shares that were earned in a Performance Period that ended prior to the
Employee's termination of employment, death, retirement or disability.
ARTICLE XI
PHANTOM STOCK AWARDS
The Committee may make Phantom Stock Awards (which may be based solely on
the value of the underlying shares, solely on any earnings or appreciation
thereon, or both) evidenced by an Agreement, to
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selected Employees on the basis of the completion of a number of years of
service, the occurrence of an event or the attainment of personal or corporate
performance objectives established by the Committee in its sole discretion.
Subject to the provisions of the Plan, the Committee shall have sole and
complete authority to determine the Employees who shall receive Phantom Stock
Awards, to determine the number of hypothetical or target shares as to which
each such Award is subject, and to determine the terms and conditions of each
such Award. There may be more than one Phantom Stock Award in existence at any
one time with respect to a selected Employee, and the terms and conditions of
each such Award may differ from each other.
The Committee shall establish vesting or performance measures for each
Phantom Stock Award on the basis of such criteria and to accomplish such
objectives as the Committee may from time to time, in its sole discretion,
determine. Such measures may include, but shall not be limited to, years of
service, periods of employment, the occurrence of certain events and individual
or corporate performance objectives including but not limited to return on
investment, earnings per share, return on shareholders' equity, or return to
shareholders. The vesting or performance measures determined by the Committee
shall be established at the time a Phantom Stock Award is made by the Committee
but may be subject to such later revisions as the Committee shall deem
appropriate. Phantom Stock Awards may not be sold, assigned, transferred,
pledged, or otherwise encumbered, except as herein provided and as provided in
Section 12.04 of Article XII, during the Performance Period.
The Committee shall determine, in its sole discretion, the manner of payment,
which may include (i) cash, (ii) shares of Common Stock, or (iii) shares of
Common Stock in such proportions as the Committee shall determine. Employees may
be offered the opportunity to defer the receipt of payment of earned Phantom
Stock Awards, and cash or Common Stock may be granted as a bonus for deferral
under such terms as may be established by the Committee from time to time;
however, in no event shall the cash or Common Stock granted as a bonus for
deferral exceed 20% of the applicable Phantom Stock Award so deferred.
In the event that a Phantom Stock Award has been made to an Employee whose
employment or service is subsequently terminated for any reason before it is
vested or prior to its earnout or the lapse of all restrictions thereon, such
Phantom Stock Award or the applicable portion thereof will be forfeited by such
Employee; provided, however, that the Committee may, in its sole discretion,
limit such forfeiture. Any Phantom Stock Award so forfeited by an Employee
(relating to the value of the underlying hypothetical or target shares of Common
Stock) shall not again be available for the grant of Awards under the Plan.
ARTICLE XII
SPECIAL EXERCISE RULES AND
CONTINUED EMPLOYMENT AND AGREEMENT TO SERVE
12.01. DEATH
Every Option shall provide that in the event the Employee dies (i) while
employed by the Company, (ii) during the period of disability described in
Section 12.02 of this Article XII, (iii) within three months after cessation of
employment for any cause (other than Retirement), or (iv) after Retirement while
Options remain outstanding, such Option shall be exercisable, at any time or
from time to time, prior to the fixed termination date set forth in the Option,
by the Beneficiaries of the decedent for the number of shares which the Employee
could have acquired under the Option immediately prior to the Employee's death.
12.02. DISABILITY
Every Option shall provide that in the event the employment of any Employee
shall cease by reason of total and permanent disability within the meaning of
Section 22(e)(3) of the Code, as determined by the Committee at any time during
the term of the Option, such Option shall be exercisable, at any time or from
time to time by such Employee prior to its termination date for the number of
shares which the Employee could have acquired under the Option immediately prior
to the Employee's total and permanent disability. The determination by the
Committee of any question involving disability shall be conclusive and binding.
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12.03. OTHER SEPARATIONS FROM SERVICE
Except as provided in Sections 12.01 and 12.04 of this Article XII, every
Option shall provide that it shall terminate on the earlier to occur of the
fixed termination date set forth in the Option or three months after cessation
of the Employee's employment for any cause except Retirement, in which event the
Option shall be exercisable at any time prior to its termination date. If an
Option is exercised after cessation of employment or Retirement, it may be
exercised only in respect of the number of shares which the Employee could have
acquired under the Option immediately prior to such cessation of employment or
Retirement; provided, however, that no Option may be exercised after the fixed
termination date set forth in the Option.
12.04. CERTAIN ACCELERATIONS
Notwithstanding any provision of this Article XII to the contrary, any
Award granted pursuant to the Plan, may, in the discretion of the Committee or
as provided in the relevant Agreement, become exercisable (earned or vested in
the case of a Restricted Stock, Performance Share or Phantom Stock Award), at
any time or from time to time, prior to satisfying the earnout or vesting
requirements or the fixed termination date set forth in the Award for the full
amount or number of awarded shares or any part thereof, less such amount or
number as may have theretofore become vested or been acquired under the Award
(i) from and after the time the Employee ceases to be an Employee of Ashland as
a result of the sale or other disposition by Ashland of assets or property
(including shares of any subsidiary) in respect of which such Employee had
theretofore been employed or as a result of which such Employee's continued
employment with Ashland is no longer required, and (ii) in the case of a Change
in Control of the Company, from and after the date of such Change in Control.
12.05. CONTINUED EMPLOYMENT UNDERTAKING
Each Employee granted an Award under this Plan shall agree by his or her
acceptance of such Award to remain in the service of Ashland for a period of at
least one year from the date of the Agreement respecting the Award. Such service
shall, subject to the terms of any contract between Ashland and such Employee,
be at the pleasure of Ashland and at such compensation as Ashland shall
reasonably determine from time to time. Nothing in the Plan, or in any Award
granted pursuant to the Plan, shall confer on any individual any right to
continue in the employment of or service to Ashland or interfere in any way with
the right of Ashland to terminate the Employee's employment at any time.
12.06. LEAVES OF ABSENCE
Subject to the limitations set forth in Section 422 of the Code, the
Committee may adopt, amend, or rescind from time to time such provisions as it
deems appropriate with respect to the effect of leaves of absence approved by
any duly authorized officer of Ashland with respect to any Employee.
ARTICLE XIII
WITHHOLDING TAXES
Federal, state or local law may require the withholding of taxes applicable
to gains resulting from the exercise of an Award. Unless otherwise prohibited by
the Committee, each Employee may satisfy any such tax withholding obligation by
any of the following means, or by a combination of such means: (i) cash
withholding from a payment relating to an Award, (ii) a cash payment, (iii)
authorizing the Company to withhold from the shares of Common Stock otherwise
issuable to the Employee pursuant to the exercise or vesting of an Award a
number of shares having a Fair Market Value, as of the Tax Date, which will
satisfy the amount of the withholding tax obligation, or (iv) by delivery to the
Company of a number of shares of Common Stock having a Fair Market Value as of
the Tax Date which will satisfy the amount of the withholding tax obligation
arising from an exercise or vesting of an Award. An Employee's election to pay
the withholding tax obligation by (iii) or (iv) above must be made on or before
the Tax Date, is irrevocable, is subject to such rules as the Committee may
adopt, and may be disapproved by the Committee. If the amount requested is not
paid, the Committee may refuse to issue Common Stock under the Plan.
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ARTICLE XIV
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event of any change in the outstanding Common Stock of the Company
by reason of any stock split, stock dividend, recapitalization, merger,
consolidation, reorganization, combination, or exchange of shares, split-up,
split-off, spin-off, liquidation or other change in capitalization, or any
distribution to common stockholders other than cash dividends, the number or
kind of shares that may be issued under the Plan pursuant to Article III and the
number or kind of shares subject to, or the price per share under any
outstanding Award shall be automatically adjusted so that the proportionate
interest of the Employee shall be maintained as before the occurrence of such
event. Any such adjustment must be made on a basis determined fair by the
Committee and in accordance with the Company's Restated Certificate of
Incorporation, as amended, and its Amended Bylaws, as in effect at the time, and
in accordance with all applicable laws. Such adjustment shall be conclusive and
binding for all purposes of the Plan.
ARTICLE XV
AMENDMENTS AND TERMINATIONS
Unless the Plan shall have been terminated as hereinafter provided, the
Plan shall terminate on, and no Award shall be granted after May 1, 2005. The
Plan may be terminated, modified or amended by the shareholders of the Company.
The Board may at any time terminate, modify or amend the Plan in such respects
as it shall deem advisable; provided, however, that the Board may not, without
approval by the holders of a majority of the outstanding shares of stock present
and voting at any annual or special meeting of shareholders of the Company: (i)
increase (except as provided in Article XIV) the maximum number of shares which
may be issued pursuant to the Awards granted under the Plan, or the maximum
number of Options which may be granted to any individual Employee in any
calendar year, (ii) change the class of persons eligible to receive Awards,
(iii) change the manner of determining the minimum Exercise Price of Options
other than to change the manner of determining the Fair Market Value of the
Common Stock as set forth in Article II, or (iv) extend the period during which
Awards may be granted or exercised.
ARTICLE XVI
MISCELLANEOUS PROVISIONS
16.01. NO RIGHT TO AWARD
Employees are selected for Awards at the sole discretion of the Committee.
No Employee shall have any claim or right to be granted an Award under the Plan.
16.02. ASSIGNMENT OR ALIENATION
An Employee's rights and interest under the Plan may not be assigned,
transferred, pledged or otherwise encumbered, in whole or in part, either
directly or by operation of law or otherwise (except in the event of an
Employee's death, by will or the laws of descent and distribution), including,
but not by way of limitation, execution, levy, garnishment, attachment, pledge,
bankruptcy or in any other manner, and no such right or interest of any Employee
in the Plan shall be subject to any obligation or liability of any such
Employee. An Award shall be exercisable, during an Employee's lifetime, only by
him or her or his or her Personal Representative. Except as specified in Article
VIII, the holder of an Award shall have none of the rights of a shareholder
until the shares subject thereto shall have been registered in the name of the
person receiving or person or persons exercising the Award on the transfer books
of Ashland.
16.03. COMPLIANCE WITH SECURITIES LAWS
No Common Stock shall be issued hereunder unless counsel for Ashland shall
be satisfied that such issuance will be in compliance with applicable federal,
state, and other securities laws. The appropriate officers of the Company shall
cause to be filed any reports, returns, or other information regarding Awards
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hereunder or any Common Stock issued pursuant hereto as may be required by
Section 13 or 15(d) of the Exchange Act, or any other applicable statute, rule,
or regulation.
16.04. EXPENSES
The expenses of the Plan shall be borne by the Company.
16.05. CONSENT TO, RATIFICATION OF CERTAIN ACTIONS
By accepting any Award under the Plan, each Employee and each Personal
Representative or Beneficiary claiming under or through him or her shall be
conclusively deemed to have indicated his or her acceptance and ratification of,
and consent to, any action taken under the Plan by the Company, the Board or the
Committee.
16.06. BINDING NATURE OF ACTIONS
Awards granted under the Plan shall be binding upon the Company, its
successors, and assigns.
16.07. OTHER COMPENSATION ARRANGEMENTS
Nothing contained in this Plan shall prevent the Board of Directors from
adopting other or additional compensation arrangements, subject to shareholder
approval if such approval is required.
16.08. TIME AWARDS GRANTED
Each Employee shall be deemed to have been granted any Award on the date
the Committee took action to grant such Award under the Plan or such later date
as the Committee in its sole discretion shall determine at the time such grant
is authorized.
ARTICLE XVII
EFFECTIVENESS OF THE PLAN
The Plan shall be submitted to the shareholders of the Company for their
approval and adoption on April 28, 1995, or such other date fixed for the next
meeting of shareholders or any adjournment or postponement thereof. The Plan
shall not be effective and no Award shall be made hereunder unless and until the
Plan has been so approved and adopted at a meeting of the Company's
shareholders. Subject to approval by the shareholders on April 28, 1995, the
Plan shall be effective May 1, 1995.
ARTICLE XVIII
GOVERNING LAW
The provisions of this Plan shall be interpreted and construed in
accordance with the laws of the State of Delaware.
No Option or SAR shall be exercisable, no Common Stock shall be issued, no
certificates for shares of Common Stock shall be delivered, and no payment shall
be made under this Plan except in compliance with all applicable federal and
state laws and regulations (including, without limitation, withholding tax
requirements) and the rules of all domestic stock exchanges on which shares of
Common Stock may be listed. The Company shall have the right to rely on an
opinion of its counsel as to such compliance. Any share certificate issued to
evidence Common Stock for which shares of Restricted Stock are awarded,
Performance Shares or a Phantom Stock Award were earned or for which an Option
or SAR is exercised may bear such legends and statements as the Company deems
advisable to assure compliance with federal and state laws and regulations. No
Option or SAR shall be exercisable, no Common Stock shall be issued, no
certificate for shares shall be delivered, and no payment shall be made under
this Plan until the Company has obtained such consent or approval as the
Committee may deem advisable from regulatory bodies having jurisdiction over
such matters.
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ARTICLE XIX
UNFUNDED PLAN
The Plan, insofar as it provides for grants, shall be unfunded, and the
Company shall not be required to segregate any assets that may at any time be
represented by grants under this Plan. Any liability of the Company to any
person with respect to any grant under this Plan shall be based solely upon any
contractual obligations that may be created pursuant to this Plan. No such
obligation of the Company shall be deemed to be secured by any pledge of, or
other encumbrance on, any property of the Company.
ARTICLE XX
RULES OF CONSTRUCTION
Headings are given to the articles and sections of this Plan solely as a
convenience to facilitate reference. The reference to any statute, regulation,
or other provision of law shall be construed to refer to any amendment to or
successor of such provision of law.
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P
R
O ASHLAND COAL, INC.
X THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Y FOR THE ANNUAL MEETING ON APRIL 28, 1995
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<S> <C>
The person(s) whose signature(s) appear(s) on the opposite side hereof hereby constitute(s) and
appoint(s) Paul W. Chellgren and William C. Payne, and each of them, his or her (their) true and
lawful attorney and proxy with full power of substitution in each, to represent such person(s)
at the Annual Meeting of Stockholders of Ashland Coal, Inc. to be held at the Ashland Coal, Inc.
Headquarters Building at 2205 Fifth Street Road, Huntington, West Virginia, at 10:30 a.m. on
Friday, April 28, 1995, and at any adjournments thereof, and to vote, with all powers such
person(s) would possess if present at such meeting (including with respect to the election of
directors, the power to cumulate votes and distribute such votes among the nominees), all shares
of Common Stock credited to such person'(s) account(s) as of the record date for the Annual
Meeting, on the matters set forth on the opposite side hereof and all other matters properly
coming before the meeting or any adjournments thereof.
Nominees for Election to the Board of Directors by the (change of address/comments)
Common Stockholders:
Robert A. Charpie, Paul W. Chellgren, Thomas L. Feazell,
Robert L. Hintz, Thomas Marshall, William C. Payne, ------------------------------------
Robert E. Yancey, Jr. ------------------------------------
------------------------------------
------------------------------------
(If you have written in the above
space, please mark the corresponding
box on the opposite side of this card.)
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, AND PROMPTLY RETURNING
THIS PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE, BUT YOU NEED NOT MARK ANY BOXES IF SEE REVERSE
YOU WISH TO VOTE IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS. SIDE
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<PAGE> 45
9772
X PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL PROPOSALS.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL PROPOSALS.
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<S> <C> <C> <C> <C> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of 2. Approval of the YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES
Directors O O Ashland Coal, O O O BY MARKING THE APPROPRIATE BOXES, AND
(see opposite side) Inc. 1995 Stock PROMPTLY RETURNING THIS PROXY IN THE
Incentive Plan. ENCLOSED ENVELOPE, WHICH REQUIRES NO
For, except vote withheld from the POSTAGE, BUT YOU NEED NOT MARK ANY BOXES
following nominee(s): 3. Ratification of IF YOU WISH TO VOTE IN ACCORDANCE WITH
Ernst & Young O O O THE RECOMMENDATIONS OF THE BOARD OF
_____________________________________ LLP as independent DIRECTORS.
auditors for 1995.
Change of
Address/Comments O
on opposite side.
I plan to attend the O
Annual Meeting.
SIGNATURE(S) DATE
-------------------------------------------------- ----------------
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
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